SC junks Yash Birla’s plea against Sebi in GDR case | The Financial Express

SC junks Yash Birla’s plea against Sebi in GDR case

A Bench led by Justice DY Chandrachud refused to interfere with the Securities Appellate Tribunal’s order that had upheld the ban on the chairman of Yash Birla Group.

SC junks Yash Birla’s plea against Sebi in GDR case
On September 29, 2020, Sebi had barred four individuals, including Yashovardhan, from the markets in relation to manipulation in issuance of GDRs by Birla Cotsyn.

The Supreme Court has dismissed Yashovardhan Birla’s appeal against the Sebi’s order barring him from accessing the securities markets for two years in a case related to issuance of global depositary receipts (GDR) by Birla Cotsyn (India) way back in 2010.

A Bench led by Justice DY Chandrachud refused to interfere with the Securities Appellate Tribunal’s order that had upheld the ban on the chairman of Yash Birla Group. The apex rejected the Yashovardhan’s appeal after noting that there was delay in getting the appeal listed before it and also in view of the fact that the debarment period was coming to an end shortly.

On September 29, 2020, Sebi had barred four individuals, including Yashovardhan, from the markets in relation to manipulation in issuance of GDRs by Birla Cotsyn. On appeal, the SAT on July 28, 2021 upheld the Sebi’s stand that the entire scheme of issuance of GDRs was fraudulent and the four individuals had acted as party to the fraud and violated the provisions of various regulations, including Sebi (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.

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Senior counsel Neeraj Malhotra, appearing for Yashovardhan, told the SC that there was an inordinate delay on Sebi’s part in issuing the show-cause notice and in supplying various documents. The tribunal’s order was “hasty and erroneous” and “clearly unsustainable, both on facts and in law and hence liable to be set aside”.

The appeal said that “it was well settled law that to make a person liable for any offence, there should be adequate evidence that surmises and conjectures cannot take the place of evidence and there needs to be a reasonable connection between the evidences and the allegations levelled on their basis. Adequate evidence is a must, where the gravity of the penalty is severe”.

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Sebi during investigations into the alleged irregularities between February and April 2010 had found that these four persons, who were on the board of directors of BCIL during the entire process of issue of GDRs, were part of the fraudulent scheme and arrangement in facilitating the subscription of its own GDR. It also alleged that BCIL had issued 9.69 million GDRs (amounting to $24.99 million) in March 2010 and the issue was subscribed by Vintage FZE (now known as Alta Vista International FZE). The subscription amount was paid by Vintage by obtaining a loan from European American Investment Bank AG (EURAM Bank) by entering into a loan agreement in February 2010 with EURAM Bank, Sebi order stated, while noting that BCIL had pledged the entire GDR proceeds as collateral against the loan availed of by Vintage from EURAM Bank.

“It is observed that the GDR issue would not have been subscribed, had BCIL not given such security towards the loan taken by Vintage. Such facilitation of the GDR issue and its subscription was not known to the public and investors,” the markets regulator said.

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