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Tribunal strikes down SEBI order on Sterlite

In a significant judgement, the Securities Appellate Tribunal on Monday struck down the order of the Securities and Exchange Board of India barring Sterlite Industries Ltd and its three directors from accessing the capital markets for two years.

The SAT ruling said in the absence of sufficient material evidence to establish that Sterlite Industries had directly or indirectly indulged in market manipulation, the SEBI order holding appellant guilty of market manipulation cannot sustain.

Monday's order paves the way for Sterlite to access the capital market, bid for a pie in any public sector undertaking if it is interested and also buy back its shares.

The SEBI had earlier prohibited the company from making any buy-back offer on the ground that such act also amounted to accessing the capital market.

The market regulator's use of provisions of Section 11 of the SEBI Act were preventive and remedial in nature but in the tribunal's view, SEBI's order was neither remedial nor preventive but 'punitive in effect as it takes away the right to mobilise funds from the public to carry on its business'.

SAT said the order had been issued on the basis of findings that Sterlite Industries had violated regulations, and added it only strengthens the view that SEBI's order was a penalty imposed on the company.

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