N. NARAYANAN versus ADJUDICATING OFFICER, SEBI

N. NARAYANAN versus ADJUDICATING OFFICER, SEBI

Directors of listed companies, including the appellant, failed in their duty to exercise due care and diligence, allowed fabrication of financial statements, manipulated figures to cause price rise in shares and pledged at inflated prices; these actions constitute fraudulent and unfair trade practices violating...

Source-derived case information.

Parties
Appellant: N. Narayanan; Respondent: Adjudicating Officer, SEBI
Jurisdiction
India
Judgment Date
26 April 2013
Procedural Posture
Civil Appeal / Final Judgment on Appeal From Securities Appellate Tribunal
Outcome
Appeals dismissed
Legal Topics
Market Abuse, Corporate Governance, Directors' Duties, Disclosure and Transparency, Penalty for Fraudulent Practices
Securities Law Company Law Market Abuse Corporate Governance Directors' Duties Disclosure and Transparency Penalty for Fraudulent Practices

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Parties

N. Narayanan

Appellant

Adjudicating Officer, SEBI

Respondent

Procedural Posture

Civil Appeal / Final Judgment on Appeal From Securities Appellate Tribunal

Legal Issues

  1. 1 Whether directors are liable for false and misleading financial disclosures under SEBI Act and Regulations
  2. 2 Whether the appellant-director's conduct amounted to fraudulent and unfair practices attracting penalty under SEBI Act

Ratio Decidendi

Directors of listed companies, including the appellant, failed in their duty to exercise due care and diligence, allowed fabrication of financial statements, manipulated figures to cause price rise in shares and pledged at inflated prices; these actions constitute fraudulent and unfair trade practices violating Sections 12A and 15HA of SEBI Act and related regulations, justifying SEBI's restraint and penalty orders.

Court Disposition

Appeals dismissed

Orders

  • Appellant restrained for two years from buying, selling, or dealing in securities or accessing securities market, directly or indirectly, and from being director of any listed company.
  • Penalty of Rs. 50 lakhs imposed under Section 15HA of SEBI Act.