Securities Appellate Tribunal (SAT) has quashed SEBI order imposing ₹2-lakh penalty on ArcelorMittal Nippon Steel India (AMNS India) for not making proper disclosure on the non-covertible debt securities listed by Essar Steel in 2011.
The National Company Law Tribunal (NCLT) admitted a petition against Essar Steel India under the Insolvency and Bankruptcy Code, 2016, in August 2017 for corporate insolvency resolution process. A Resolution Professional was appointed in February 2019. The resolution plan filed by AMNS India was upheld by NCLT in July 2019.
The Supreme Court also approved the resolution plan by NCLT in November 2019 holding that AMNS India must get a clean slate and cannot be faced with additional claims after the resolution plan was approved.
After the passing of the impugned order, the management of Essar Steel India was taken over by the new management of AMNS India in December 2019.
Violation of LODR regulations
In October 2019, SEBI issued show-cause notice to AMNS India alleging violation of LODR (Listing Obligations and Disclosure Requirements) Regulations by Essar Steel India between December 2015 and March 2019.
SEBI lawyer contended that during the pendency of the resolution plan, the Resolution Professional was required to comply with the LODR provisions and in case of non-compliance, the Resolution Professional would be responsible for non-compliance of the provisions. In this regard, he relied on Insolvency and Bankruptcy Board circular issued in January 2018.
While quashing SEBI penalty levied on March 28, Justices Tarun Agarwala and MT Joshi said SEBI can initiate proceedings for the relevant period against the relevant entities taking under the IBC.