SAT Reduces SEBI’s Penalty On Former Maars Software MD To Rs 10 Lakh In GDR Case

The Securities Appellate Tribunal (SAT) has slashed the penalty imposed on the former MD of Maars Software International to Rs 10 lakh from Rs 1 crore in a case related to manipulation in the issuance of global depository receipts. Maars Software International Ltd (MSIL) came out with a global depository receipts (GDRs) issue on August 10, 2007. Pravin Champalal Jain was the former managing director of MSIL.

"While affirming the order of SEBI's Adjudicating Officer (AO) for the violations committed by the company, we reduce the penalty from Rs 1 crore to Rs 10 lakhs. "In our opinion, the penalty imposed is excessive and disproportionate to the violation and is also discriminatory," the tribunal said in its ruling on Tuesday.

The verdict came after Jain challenged the order passed by SEBI in July 2020. SEBI's AO had imposed Rs 10.25 crore on MSIL, Rs 1 crore on Jain and Rs 10 lakh each on Harshawardhan S Rathore and Nikunj Babulal Choradiya for flouting Prohibition of Fraudulent and Unfair Trade Practices rules. Rathore and Choradiya were also the directors of MSIL.

"We also find that the appellant (Jain) had resigned on January 14, 2008. Thus, the imposition of penalty upon the appellant after 12 years from the date of resignation is excessive. The money raised through GDRs has been received by the company and has not been misappropriated. "The same has been utilised for the purpose for which the GDR was issued which fact has not been disputed. Thus, it is not a case of defalcation of the funds," the appellate tribunal said.