SAT rejects SEBI's order on ArcelorMittal

SAT rejects SEBI's order on ArcelorMittal

The markets regulator had imposed a fine of Rs.2 lakhs on the company

The Securities Appellate Tribunal has quashed the order of the Securities and Exchange Board of India (SEBI) imposing a fine on ArcelorMittal Nippon Steel India Ltd (formerly Essar Steel) for violating the listing obligations and disclosure norms.

The bench led by Justice Tarun Agarwala said. "The impugned order of 28 March cannot be sustained and is quashed. The appeal is allowed with no order as to the costs. However, it will be open to the respondent SEBI to initiate the proceedings for the relevant period against the entities."

SEBI had imposed a penalty of Rs. 2 lakhs on ArcelorMittal for the violations. In its order, SEBI had stated, "The enforcement of this order shall be subject to the outcome of the appeals in the Monnet Ispat and Energy Ltd, Alok Industries Ltd, and Raj Oil Mills Ltd before the Supreme Court."

The markets regulator had appealed against an earlier SAT ruling that said SEBI could not initiate action against a company whose resolution plan had already been approved.

In October 2019, an adjudicating officer (AO) of SEBI issued a show-cause notice to ArcelorMittal. It questioned why an inquiry should not be initiated against it and a penalty imposed for non-disclosures related to the issuance of non-convertible debentures in 2011.

After the completion of the Corporate Insolvency Resolution Process (CIRP), Essar was taken over by ArcelorMittal in December 2019. In August 2017, bankruptcy proceedings were initiated against the debt-laden Essar Steel.

Citing its earlier order, the tribunal said, "Once a resolution plan has been approved it becomes binding on all creditors, including the government and the local authorities."