The Supreme Court on Wednesday sent back to the Securities Appellate Tribunal (SAT) a case involving a ₹5.25-crore penalty imposed by the Securities and Exchange Board of India (Sebi) on Cairn India, now part of Vedanta Ltd, over its 2014 share buyback.
A bench led by Justice J.B. Pardiwala decided to send the case back to SAT for fresh consideration of certain factual aspects.
The detailed judgment was not available at the time of publication, and the specific grounds for the Supreme Court’s decision were not immediately clear.
In January 2014, Cairn India announced a plan to buy back up to 17.08 crore shares at a maximum price of ₹335 apiece, involving a total amount of up to ₹5,725 crore. The buyback was scheduled to run from 23 January to 22 July 2014.
However, the company eventually bought back only 3.67 crore shares, spending ₹1,225.45 crore—about 28.59% of the announced buyback size. Under the applicable buyback rules, at least 50% of the earmarked amount was required to be utilised.
Sebi subsequently investigated Cairn’s trading activity during the buyback period. The regulator alleged that the company made a misleading public announcement without genuinely intending to complete the buyback, thereby violating the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and the buyback regulations. also alleged that Cairn’s buy orders were inadequate despite favourable liquidity in the market.
In May 2021, Sebi imposed a ₹5.25-crore penalty on Cairn India— ₹5 crore for alleged PFUTP violations and ₹25 lakh for violation of buyback regulations. It also imposed ₹15 lakh each on three former Cairn officials: P Elango, Aman Mehta and Neerja Sharma, who had signed the buyback advertisement. Cairn India had by then merged with in 2017.
Cairn challenged the regulator’s order before SAT. The company argued that it could not have anticipated the sharp rise in its share price when the buyback was announced. According to its case, the stock traded above the maximum buyback price of ₹335 for a substantial part of the buyback period, making purchases at the announced price unattractive or impossible.
SAT accepted the core of Cairn’s argument and, in October 2023, set aside Sebi’s order and the ₹5.25-crore penalty. It also quashed the ₹15 lakh penalties imposed on the three former officials. The tribunal held that the material before it did not conclusively establish that Cairn had no intention of successfully completing the buyback. It also observed that the company could not have predicted the bullish market trend or known when it announced the buyback that the stock would trade above ₹335 on a large number of trading days.
then challenged the SAT order before the Supreme Court. In November 2024, the apex court refused to stay the SAT order and issued notice on Sebi’s appeal, allowing the matter to proceed for final adjudication.