A bench led by Justice SA Nazeer granted the stay on the condition that Kapoor will deposit Rs 50 lakh as directed by the SAT in its June 18 order.
The Supreme Court on Monday granted conditional stay on the Securities Appellate Tribunal’s order that had upheld Sebi’s orders imposing a fine of Rs 1 crore on former Yes Bank CEO Rana Kapoor and a penalty of Rs 50 lakh each on two other entities – Yes Capital (India) and Morgan Credits.
A bench led by Justice SA Nazeer granted the stay on the condition that Kapoor will deposit Rs 50 lakh as directed by the SAT in its June 18 order. The apex court also noted that the two entities had already deposited Rs 30 lakh each pursuant to the tribunal dismissing their appeal.
Counsel Somasekhar Sundaresan told the judges that Kapoor, who is behind bars, could not deposit the penalty amount as all his assets have been frozen. Assets were frozen by various enforcement agencies in connection with multiple cases including bribery and money laundering. Senior counsel Mustafa Doctor appeared for Sebi and opposed any grant of stay.
Yes Capital and Morgan Credits, then promoters of Yes Bank, were penalised by Sebi for failing to make requisite disclosures pertaining to the encumbrance of shares held by them in Yes Bank to the stock exchanges and the lender. Thus, the two promoter entities had allegedly violated the provisions of SAST (Substantial Acquisition of Shares and Takeover ) Regulations.
Sebi had also imposed a fine of Rs 1 crore on Kapoor, then managing director of Yes Bank, for not making disclosures regarding the Morgan Credits transaction. By not disclosing the transaction to Yes Bank’s board of directors, Kapoor has created an opaque layer between him and stakeholders, Sebi had said in its September 2020 order.
“The charging provisions of the Sebi (Listing, Obligations and Disclosure Requirements), 2015 (LODR Regulations) entail disclosure obligations on listed companies, but Sebi imposed penalty on Kapoor for alleged failure to make disclosure of a private contractual obligation of the promoters not involving the listed
company,” the appeal stated, adding that the penalty imposed was also “disproportionate” with the alleged violations.