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The Securities Appellate Tribunal (SAT) has set aside a SEBI’s order for disclosure lapses, imposing a penalty of ₹2 lakh on Essar Steel India Ltd, now known as ArcelorMittal Nippon Steel India Ltd.
Bankruptcy proceedings were initiated against the debt-laden Essar Steel in August 2017. After completing the corporate insolvency resolution process, Essar Steel was taken over by the new management, ArcelorMittal Nippon Steel India, in December 2019.
"The impugned order dated March 28, 2022 cannot be sustained and is quashed. However, it will be open to the respondent SEBI to initiate proceedings for the relevant period against the relevant entities," SAT said in an order passed on July 1.
Violation of LODR rules
The ruling comes after an appeal was filed against the SEBI order, levying a ₹2 lakh fine on Essar Steel for not making the requisite disclosure under LODR (Listing Obligations and Disclosure Requirements) rules in the case on the issuance of non-convertible debt securities in 2011.
The alleged violation of LODR rules by Essar Steel was from December 2015 to March 2019.
In October 2019, the Securities and Exchange Board of India (SEBI) had issued a show-cause notice asking why an inquiry should not be initiated and penalty should not be imposed on the company.
The appellant contended that the National Company Law Tribunal (NCLT) admitted a petition against Essar Steel India under the Insolvency and Bankruptcy Code in August 2017 for the corporate insolvency resolution process. A resolution professional was appointed in February 2019.
The resolution plan filed by ArcelorMittal Nippon Steel India was upheld by NCLT in July 2019, which was further approved by , the Supreme Court in November 2019, holding that post-approval, ArcelorMittal Nippon Steel India must get a clean slate and cannot be faced with additional claims.
SEBIi's counsel had contended that during the pendency of the resolution plan, the resolution professional was required to comply with the LODR provisions. In case of non-compliance, the resolution professional would be responsible for non-compliance with the provisions.
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