The Supreme Court on Monday stayed an aggregate fine of Rs 80 crore levied on capital markets regulator Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE), and the Bombay Stock Exchange (BSE) by the HC last month.
The fine was imposed for the 'erroneous freezing' of the demat accounts of two Mumbai residents who were 'erroneously' labeled promoters.
The order is among the few cases when any court and tribunal has imposed a fine on the capital markets regulator.
This case relates to a 2017 order by SEBI, following which the demat accounts of Pradeep Mehta and his son Neil Mehta were freezed .
The order was against Shrenuj & Company for alleged violation of SEBI norms, whose chief promoter was Neil Mehta's father-in-law.
A three-judge Bench headed by Chief Justice of India D.Y. Chandrachud prima facie noted that the Bombay High Court had 'erred' in setting aside the freezing orders without hearing the markets regulator and the two stock exchanges.
The Supreme Court ordered a re-hearing of the case by the Bombay High Court and passing of fresh judgement after consulting all the stakeholders, after noting that the penalty was slapped without hearing the concerned market bodies.
Pradeep Mehta had challenged the freezing of his accounts saying he did not have any role to play in the management of Shrenuj & Company where he was just a minority shareholder.
He also said that his minor son Neil, resident in Singapore, was being unfairly affected.
Giving the order on August 26, the Bombay High Court had censured SEBI, BSE and the NSE over what it termed the "high-handed" and "reckless" actions by the market bodies, noting due diligence was not performed and also the basic principles of natural justice had been bypassed.
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