The Securities Appellate Tribunal has passed an ad interim order allowing Avadhut Sathe Trading Academy to restart its operations, and opened up its bank account to meetg operational expenses.
The Tribunal presided over by Justice PS Dinesh Kumar in his verbatim order maintained the status quo and expressed shock over SEBI’s order asking Avadhut Sathe Trading Academy and Avadhut Sathe to deposit ₹546 crore, after freezing their accounts.
SAT was hearing an appeal filed by ASTAPL, Avadhut Sathe and his wife Gouri Sathe, on a SEBI order of December 4 banning Avadhut Sathe and the trading academy from trading, collecting fees from students, and asking them to deposit sum of ₹546 crore.
The SEBI, in its order, had accused them of giving investment advice and research analyst services in the garb of running a trading academy. The next hearing in the matter is slated for January 9.
Sathe was represented by senior counsel Janak Dwarkadas, senior counsel Gaurav Joshi and CK Legal. SEBI was represented by senior advocate Chetan Kapadia.
Arguing on behalf of Sathe, Dwarkadas told SAT that SEBI had passed an ex-parte directing them to deposit ₹546 crore in 15 days after freezing their bank and demat accounts.
The senior counsel also pointed out to the bench that of the 3.5 lakh students who were undergoing training at Avadhut Sathe Trading Academy, SEBI had relied on the complaints of just 12 students.
Dwarkadas said SEBI had built the entire investigation around the use of real time data by ASTA, while imparting education. “How can you teach a child to swim without entering the water?” he asked.
He pointed out that as per the SEBI Act, a party has 45 days to file an appeal. However, SEBI had given ASTA a mere 21 days to file a reply and only 15 days to deposit Rs 546 crore, while immediately freezing their bank accounts.
Seeking a stay on the SEBI order, he told the bench that ASTA had monthly expenses of ₹5.25 crore and that with their bank accounts frozen, they were unable to meet the expenses.
However, the SEBI side pointed out that of the overall expenses, ₹2 crore for advertisements and 1 crore for seminar expenses, may not be considered necessary. SEBI had accused the academy of running unregistered investment advisory (IA) and research analyst (RA) services, while projecting itself as a stock market education platform.
After hearing both sides, SAT passed an ad interim order to allow the appellants to operate their accounts to meet the monthly expenses to run the academy.
SAT in its order stated, “In view of the intervening vacations, we direct that the appellant may be permitted to draw ₹2.25 crore for this month.” Bank accounts to that extent will be defreezed.