SAT set aside SEBI’s order against ICICI bank


On July 13, 2020Securities Appellate Tribunal (SAT)has modifiedSEBI’s order that imposed Rs 10 lakh fine on ICICI Bank, to only a warning.

Securities and Exchange Board of India (SEBI) in September 2019, imposed a fine of Rs 10 lakh on ICICI Bank and its then compliance officer Sandeep Batra for over delayed disclosure regarding its amalgamation with Bank of Rajasthan(BOR) on May 18, 2010. SEBI, however, under its two previous chairmen, failed in issuing its Show-cause notice (SCN) which led to 8-year delay. The case actually moved ahead when SCN was issued in 2018 under the incumbent chairman Ajay Tyagi.

SEBI found that the agreement between ICICI Bank and Bank of Rajasthan was executed at 04:30 AM on May 18, 2010 but the disclosure of the agreement was made by ICICI Bank at 8:18 p.m to BSE and at 8:10 p.m to NSE, respectively, after 15 hours of the occurrence of the event which also means after a delay of one full trading day.SEBI suspected that the delay on the part of ICICI Bank in making the disclosure of the agreement resulted in insider trading in the scrip of BOR.

Against the order ICICI moved to the tribunal and mentioned about undue delay of eight years in issuing the show cause notice and nine years in passing the impugned order.

The tribunal noted that ”Several years delay in show-causing and concluding proceedings in such known incidence of violation/ alleged violations is a failure in effectively performing the behaviour modification function of a market regulator.”

The Securities Appellate Tribunal considered view that issuance of a penalty order against ICICI Bank in September, 2019 for certain disclosure violations in mid-May 2010 by issuing a show-cause notice on June 26, 2018 has caused prejudice to the bank and the order suffers from laches.

On its order dated July 8, The Tribunal, held that laches, by itself in the peculiar circumstances of the case, will not vitiate the proceedings but definitely the penalty amount of Rs 10 lakh imposed on the bank cannot be sustained and it needs to be substituted by a lesser penalty.

While upholding the impugned order on merits,the tribunal modified the penalty imposed on the appellant to only a warning which will meet the ends of justice in the given facts and circumstances of the matter,

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