Satyam scam: SAT revokes Sebi order against erstwhile Maytas Infra, says director and others cannot be considered insiders

New Delhi: The Securities Appellate Tribunal (SAT) has set aside a Securities and Exchange Board of India (Sebi) order wherein erstwhile Maytas Infra was directed to disgorge unlawful gains worth Rs 59 crore in the Satyam Computer scam that came to light in 2009. Maytas Infra was later acquired by IL&FS Engineering and Construction Company. The tribunal’s decision follows an order passed by the Supreme Court in May this year, wherein it was held that several entities, including B Teja Raju, could not be considered as insiders in the Satyam matter. Teja Raju, son of Satyam scam kingpin B Ramalinga Raju, was a director of Maytas Infra.

Citing the Supreme Court ruling, the SAT said the impugned decision of Sebi which held that Maytas Infra was an insider on account of its director Teja Raju “cannot be sustained”.

In September 2015, Sebi had ruled that several entities, including Maytas Infra, had made unlawful gains by transacting in the shares of erstwhile Satyam Computer Services while they were in possession of unpublished price sensitive information. The transactions were done with complicity and involvement of Satyam’s Chairman B Ramalinga Raju and ex-Managing Director B Rama Raju, Sebi had said. The regulator had directed the entities to disgorge unlawful gains to the tune of Rs 543.93 crore and out of the total amount, little over Rs 59 crore was to be disgorged by Maytas Infra. [caption id=“attachment_3937951” align=“alignleft” width=“380”]  Sebi logo. Reuters image[/caption] As per Sebi, Maytas Infra was an ‘insider’ on the ground that its director Teja Raju was reasonably expected to be privy to unpublished price sensitive information relating to the fraud committed at Satyam Computer during the period from 2001 to 2008. In its ruling, dated June 22, the tribunal said there is nothing on record to suggest that Ramalinga Raju was a promoter of Maytas Infra. Citing the Sebi order passed by one of its Whole Time Members (WTMs) in September 2015, the SAT also said the member himself recorded that Maytas Infra was promoted by Teja Raju along with SNR Investments Pvt Ltd and Veeyes Investments Pvt Ltd. “Thus, the decision of WTM is mutually contradictory… In these circumstances, decision of the WTM of Sebi is that Ramalinga Raju was a promoter of Maytas Infra Ltd cannot be sustained,” it added. In view of the Supreme Court order that entities, including Teja Raju, cannot be insiders, the SAT said “impugned decision which holds that Maytas Infra Ltd was an ‘insider’ on account of its director Teja Raju was an ‘insider’ cannot be sustained”. Accordingly, the tribunal has set aside the order passed by Securities and Exchange Board of India (Sebi)