The Securities Appellate Tribunal has set aside Sebi's order that imposed Rs 10 lakh fine on ICICI Bank for delayed disclosure about a binding agreement signed by the lender with Bank of Rajasthan back in 2010.
In September 2019, markets regulator Sebi imposed a fine of Rs 10 lakh on ICICI Bank for disclosure lapses, including delayed disclosure of binding agreement signed with Bank of Rajasthan.
ICICI Bank moved the tribunal against the order. It also mentioned about the inordinate delay of eight years in issuing the show cause notice and nine years in passing the impugned order.
In its order dated July 8, the tribunal said that though there are laches, that by itself in the peculiar circumstances of the case, will not vitiate the proceedings but definitely the penalty amount of Rs 10 lakh imposed on the bank cannot be sustained and deserves to be substituted by a lesser penalty.
"... while upholding the impugned order on merits, we modify the penalty imposed on the appellant to only a warning which will meet the ends of justice in the given facts and circumstances of the matter," it said.
On May 18, 2010 early morning, an executive director of ICICI Bank signed a binding agreement with the dominant shareholders of Bank of Rajasthan proposing an amalgamation of the two lenders. Disclosures relating to the amalgamation were made to the stock exchanges in the evening on the same day.
On the basis of interpretation given in the impugned order itself, the finding that signing of the binding agreement was a material and price sensitive information and hence there was a delay of a trading day in making the disclosure to the stock exchanges cannot be faulted, the tribunal said.
"After all the charge against the appellant is one trading day's delay in disclosure, but the delay on the part of Sebi to show cause is 2,955 days from the date of the event and about 2,130 days from the date of the preliminary investigation report, which is too wide a gap to be ignored.
"Several years delay in show-causing and concluding proceedings in such known incidence of violation/ alleged violations is a failure in effectively performing the behaviour modification function of a market regulator," it noted.
According to the tribunal, it was of the considered view that issuance of a penalty order against ICICI Bank in September, 2019 for certain disclosure violations in mid-May 2010 by issuing a show cause notice on June 26, 2018 has caused prejudice to the bank and the order suffers from laches.