Supreme Court Dismisses SEBI's Appeal Against SAT's Decision in Apollo Tyres Case

4 Dec 2023 , 01:57 PM

In a significant legal development, the Supreme Court (SC) on December 4 rejected the appeal filed by the Securities and Exchange Board of India (SEBI) challenging the Securities Appellate Tribunal’s (SAT) decision to annul a Rs 65 lakh penalty imposed on Apollo Tyres for violating share buyback norms back in 2003.

During the hearing, the SC bench, led by Justice Sanjiv Khanna, criticized SEBI for routinely appealing SAT decisions that did not favor the market regulator. Justice Khanna directed SEBI to submit a comprehensive list of appeals filed against SAT’s orders in the apex court.

In addition to the critique, Justice Khanna requested an affidavit from the officer overseeing the case, seeking an explanation for the substantial delay in taking action against Apollo Tyres. Notably, SEBI issued the penalty order in 2018, nearly 15 years after the alleged violation in 2003.

Solicitor General Tushar Mehta, representing SEBI, clarified to the court that the regulator does not appeal against every order but makes informed decisions in such cases. However, despite the defense, the court ultimately dismissed the appeal, keeping the legal questions open for future consideration.

In a prior ruling in September 2023, SAT had not only dismissed SEBI’s appeal but also directed the regulator to refund the penalty amount deposited by Apollo Tyres within four weeks. The initial appeal was lodged against SEBI’s November 2018 order, which imposed a penalty of Rs 65 lakh on Apollo Tyres for alleged violations of share buyback rules.

The case revolved around accusations that Apollo Tyres, and its promoters, had repurchased shares in violation of the relevant section of the Companies Act and SEBI regulations. SEBI contended that Apollo Tyres had not adhered to specified methods for share repurchase outlined in the buyback regulation.

This legal saga dates back to 2017 when SAT set aside an over Rs 1 crore penalty imposed by SEBI on Apollo Tyres, directing the regulator to issue a fresh order. The tribunal argued that the overall penalty exceeded the limit prescribed under the Sebi Act. The recent SC dismissal adds another chapter to this long-standing legal battle between SEBI and Apollo Tyres.