The Supreme Court on Monday admitted petitions filed by directors of Bonanza Biotech Ltd challenging SEBI's decision that banned the latter from securities market for seven years.
With this, it also admitted another petition filed by Bonanza Biotech Ltd challenging the same tribunal's judgment that upheld SEBI's ban imposed on it and its directors -- Dhurma Vaghela, Amit Patel, Sharad Gujarati and Rakesh Pandya.
A bench headed by Justice L S Panta, while admitting the petitions, refused to stay the Securities Appellate Tribunal's verdict which upheld the SEBI order barring the appellants and BBL for violating Regulations 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 1995, in April 2007.
According to Vaghela, there was no provision either in the SEBI Act, 1992, or under the Regulations of 1995 to pass such an order. Besides, the tribunal failed to appreciate that there was no evidence before SEBI that Vaghela was responsible for the affairs of BBL, which allegedly violated law.
Thus the appellants could not be vicariously held liable for BBL's acts merely because they were its directors, the petitions said, adding they were the non-executive and independent non-designated directors and had no administrative or executive control over BBL's management.