The Securities Appeals Tribunal has slashed Sebi’s fine against Jindal Cotex Ltd (JCL) from Rs 10.3 crore to Rs 25 lakh in a case related to rigged GDR issuance.

Also, the appellate tribunal reduced the fine of JCL Managing Director Sandeep Jindal from Rs 20 lakh to Rs 10 lakh.

However, it confirmed the penalties imposed on Rajinder Jindal and Yash Paul Jindal, JCL’s full-time directors and chairman, respectively, saying the fines were neither arbitrary nor excessive.

“In our view, the penalty is ‘excessive’, disproportionate to the offence and discriminatory.

In its order dated February 23, the appeals court said: “The company is a running concern. It is unreasonable to penalise the company with such a heavy penalty that it effectively punishes shareholders, especially for a running company.”

The ruling came after JCL, Sandeep Jindal, Rajinder Jindal, and Yash Paul Jindal challenged the regulator’s order passed in January 2020.

Sebi’s Adjudicating Officer (AO) fined JCL Rs 10.3 crore, Sandeep Jindal Rs 20 lakh and Rajinder Jindal and Yash Paul Jindal Rs 10 lakh each for manipulation in the issuance of Global Depository Receipt (GDR).

“The money raised through the GDRs has been received by JCL and has not been misappropriated. The fact that these funds have been used for the purpose for which the GDRs were issued is not in dispute. Therefore, this is not a case of misappropriation of funds,” the appellate tribunal said.

According to the order, the company was also penalised for non-disclosure of listing agreements in breach of Section 23E of the Securities Contracts (Regulation) Act. It added that imposing a fine is simply wrong and not applicable.

Confirming the AO’s order for the violations committed by JCL, it said, “We reduce the fine against the company to Rs 25 lakh, while the fine against Sandeep Jindal is reduced to Rs 10 lakh and Rajinder Jindal and the penalty against Yash Paul Jindal has been affirmed, the appellate tribunal said.