Supreme Court directs SAT to revisit Cairn India buyback case

New Delhi: The Supreme Court on Wednesday asked the Securities Appellate Tribunal (SAT) to reconsider the Securities and Exchange Board of India's case alleging irregularities against Cairn India, now part of Vedanta Ltd, over a 2014 share buyback programme. The tribunal in October 2023 set aside a ₹5.25 crore penalty that Sebi imposed on the company over the buyback issue but did not decide on charges under the regulator's Unfair Trade Practices (PFUTP) Regulations.

A Supreme Court bench of Justices JB Pardiwala and KV Viswanathan partly allowed Sebi's appeals against SAT's ruling and asked the tribunal to reconsider the question of "fraud alone" under the PFUTP regulations and decide on the matter in six months. The tribunal was directed to reconsider the matter after examining disputed trading data and other facts.

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Sebi imposed the fine on Cairn India for allegedly making a misleading public announcement of the buyback of shares on January 14, 2014. It had also set aside a penalty of ₹15 lakh each Sebi imposed on P Elango, the then CEO and a director of Cairn, and two other directors: Aman Mehta and Neerja Sharma.

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On whether the release of an escrow amount deposited for the buyback prevented Sebi from pursuing a separate fraud case, the top court said: "The mere release of the escrow does not create an automatic statutory bar to proceedings under the PFUTP Regulations because the release of the escrow is not necessarily equivalent to absence of fraud."