Informist, Wednesday, Nov 8, 2023
MUMBAI – The Securities and Appellate Tribunal today threw out an October 2022 order of the Securities and Exchange Board of India in a price manipulation case pertaining to shares of Omnitech Infosolutions Ltd on the ground that there was a long delay in issuing show cause notice which in itself caused prejudice to the alleged offenders.
The investors against whom SEBI had in its order of October 28, 2022, imposed a penalty of 2.5 mln rupees, jointly and severally, had appealed to the tribunal.
“Without going into the merits of the case, we find that there was undue delay in the issuance of the SCN (show cause notice),” the tribunal said in its ruling. SEBI took more than seven years to complete its investigation after receiving a complaint of price rigging in September 2014.
The complaint itself was made two years after the alleged price rigging period from September 2012 to January 2014. SEBI issued a show cause notice to the alleged offenders in October 2021.
The tribunal noted that SEBI had sought information from the stock exchange regarding trades in the shares of Omnitech Infosolutions during the period under inspection as late as January 2020.
Under the securities laws governing SEBI’s powers there is no period of limitation on the market regulator for issuance of show cause notice or for completing the adjudication proceedings following the show cause notice.
But the tribunal cited a Supreme Court order of 1991 in which the court held that in the absence of any period of limitation the statutory regulatory authority is required to exercise its powers within a reasonable period depending on the facts of each case.
The tribunal said that “in view of the inordinate delay in issuance of the SCN (show cause notice), the impugned order cannot be sustained and is quashed in so far as appellants are concerned.”
Shares of Omnitech Infosolutions last got traded on Sep 4, 2017, when they closed at 1.07 rupees on the BSE. End
Reported by Rajesh Gajra
Edited by Ashish Shirke
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