The Securities Appellate Tribunal (SAT) on Thursday quashed the markets regulator Sebi's order imposing a fine of Rs 7 crore on the National Stock Exchange (NSE) in the dark-fibre case.
Additionally, the tribunal has set aside a fine of Rs 5 crore levied by Sebi on the exchange's former official Anand Subramanian.
Further, it has partly set aside the regulator's order against former MD and CEO of NSE Chitra Ramkrishna, ex-official Ravi Varanasi and a few stock brokers, among others.
The SAT ruling order came after the 16 appeals were filed against a Sebi's order passed in June 2022 against 18 entities, including NSE, its former officials and stock brokers.
The order was challenged by the appellants on different grounds.
The Securities and Exchange Board of India (Sebi) in its order imposed penalties of different amounts against each appellant for violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations as well as Sebi's circulars.
Further, fines were slapped for flouting the Securities Contracts (Regulation) Act, 1956 (SCRA).
Sebi, in its order, imposed a penalty of Rs 7 crore on NSE, Rs 5 crore each on Ramkrishna, Varanasi and Subramanian.
Also, fines were levied against Way2Wealth Brokers, GKN Securities and Sampark Infotainment.
The case relates to the alleged differential access given to certain broking firms in the form of 'dark fibre' at NSE, to connect across the co-location facilities before other members.
A dark fibre or unlit fibre, with respect to network connectivity, refers to an already laid but unused or passive optical fibre, which is not connected to active electronics/equipment and does not have other data flowing through it and is available for use in fibre-optic communication.
The regulator had initiated an investigation into the dealings of several entities, for the period 2009 to 2016 to investigate the matter of providing connectivity to certain stock brokers by NSE in a manner which may be detrimental to the investors or the securities market.
Setting aside Sebi's order, the tribunal noted that the order of the AO (Adjudicating Officer) contained nine charges against the NSE, out of which seven charges were the same as given by the WTM (Whole Time Member).
It further said that seven charges against the exchange were set aside by this tribunal in its order of August 9, 2023.
Further, SAT has quashed the other two charges issued against NSE -- delay in processing the request of the members and inconsistent and contradictory reply given by the bourse to Sebi.
Concerning Ramkrishna, SAT said that a penalty of Rs 3 crore for violation of the PFUTP rules cannot be sustained and quashed it.
The penalty of Rs 2 crore for the violation of the SCRA has been reduced to Rs 25 lakh saying Sebi's fine was arbitrary and excessive.
On Ravi Varanasi, the tribunal has slashed the penalty amount saying that substantial justice would be done if a minimum penalty of Rs 5 lakh is imposed on him.
In August, SAT partly set aside a Sebi order directing the NSE to disgorge Rs 62.6 crore, along with interest, in the dark-fibre case.
Also, the appellate tribunal quashed Sebi's direction barring Ramkrishna from holding any managerial positions in a market intermediary for three years and three other former officials -- Ravi Varanasi, Nagendra Kumar and Devi Prasad Singh -- for two years.
