Mumbai, April 1: The Securities Appellate Tribunal (SAT) upheld an order by the Securities and Exchange Board of India (Sebi) debarring the Khemkas along with the NEPC group of companies from accessing the capital market for a period of five years.
In an order dated June 2, 2001, Sebi had banned Ravi Prakash Khemka, Raj Kumar Khemka, Ratan Kumar Khemka, Tirupathi Kumar Khemka and Madhu Sudan Khemka along with their group companies from the capital market for five years. The order was issued under section 11B read with section 4 (3) and section 27 of the Sebi Act, 1992.
NEPC India, NEPC Agro Foods and Skyline NEPC had appealed against the order.
In response, SAT said: “Considering the fact that shareholders of Damania Airways have been deprived of the money legitimately due to them, the Respondent (Sebi) felt that the persons responsible should not be allowed to repeat such a ‘performance’ and felt the need to prevent them from repeating such activities.”
SAT ruled: “Sebi’s order is a preventive measure taken to protect the interest of the investors and therefore permissible in terms of section 11B. The Tribunal after relying on several authorities, held in the said case that the respondent is empowered to issue directions of preventive or remedial nature to protect the interest of investors that the restriction is only on issuing directions which tantamount to penalty. In my view the impugned direction in the light of the facts specific to the case is not a penalty.
For the reasons discussed above, the impugned order is upheld and the appeal is dismissed.”