Appellate tribunal SAT on Thursday set aside SEBI's orders that had barred Satyam Computer's B Ramalinga Raju, B Rama Raju and others from the securities markets for up to 14 years and asked the markets regulator to pass a fresh order in the 14-year old case.
The ruling came after two separate orders of the Securities and Exchange Board of India (SEBI) passed in 2018 were challenged by the six applicants.
The case relates to Ramalinga Raju and Rama Raju—who were promoters and directors of Satyam Computer Services—falsifying the company's financial statements and making illegal gains by way of insider trading.
Besides, B Suryanarayana Raju and SRSR Holdings had allegedly dealt with shares of Satyam Computer on the basis of unpublished price sensitive information.
The scam came to light on January 7, 2009, when Ramalinga Raju—then Chairman of Satyam Computer—admitted to manipulating the company's accounts.
In its order passed on October 16, 2018, SEBI had prohibited V Srinivas and G Ramakrishna from the securities markets for 7 years. Further, Srinivas and Ramakrishna were directed to disgorge wrongful gains of Rs 15.65 crore and Rs 11.5 crore, respectively.
In another ruling passed on November 2, 2018, the regulator had restrained Ramalinga Raju, Rama Raju, B Suryanarayana Raju and SRSR Holdings from the securities markets for 14 years. Also, they were asked to disgorge Rs 813 crore of unlawful gains with interest.
In these two orders, the regulator had directed them to disgorge the amount along with 12 per cent interest per annum from January 7, 2009.
Dismissing SEBI's two orders, the Securities Appellate Tribunal (SAT) said the approach of the regulator is patently erroneous and cannot be sustained as "no reason has been given as to why the magic figure of 14 years of restraint was appropriate".
While setting aside the orders passed by SEBI, SAT asked it to pass a fresh order within four months.
Also, it asked the regulator to consider the intrinsic value while calculating the unlawful gain. Moreover, the unlawful gain would be calculated individually for all the appellants.
Further, the tribunal directed SEBI to consider the issue of interest and reconsider the period of restraint afresh for all the appellants.