BEFORE THE SECURITIES APPELLATE TRIBUNAL

MUMBAI
Date: 21.05.2021

Misc. Application No. 625 of 2021

(Urgent Hearing)
Misc. Application No. 626 of 2021
(Stay Application)
And
Appeal No. 373 of 2021

Yes Bank Ltd. …Appellant

Versus

Securities and Exchange Board of India …Respondent

Mr. Pesi Modi, Senior Advocate with Mr. Vikram Raghani,

Mr. Joby Matthew, Mr. Pulkit Sukhramani and Ms. Vidhi
Jhawar, Advocates i/b J. Sagar Associates for the Appellant.

Mr. Mustafa Doctor, Senior Advocate with Mr. Mihir Mody,

Mr. Arnav Misra and Mr. Mayur Jaisingh, Advocates i/b. K.
Ashar & Co. for the Respondent.

WITH
Misc. Application No. 374 of 2021
(Urgent Hearing)
Misc. Application No. 628 of 2021
(Stay Application)
And
Appeal No. 374 of 2021

Vivek Kanwar & Ors. …Appellants

Versus

Securities and Exchange Board of India …Respondent

Mr. Kevic Setalvad, Senior Advocate with Mr. Vikram

Raghani, Mr. Joby Matthew, Mr. Pulkit Sukhramani and
Ms. Vidhi Jhawar, Advocates i/b J. Sagar Associates for the
Appellants.
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Mr. Mustafa Doctor, Senior Advocate with Mr. Mihir Mody,

Mr. Arnav Misra and Mr. Mayur Jaisingh, Advocates i/b. K.
Ashar & Co. for the Respondent.

ORDER:

1. The two appeals have been filed against a common order

dated April 12, 2021 passed by the Adjudicating Officer (“AO”

for convenience) imposing penalty upon the bank and its

employees. Therefore the appeals are being taken up together.

2. Certain complaints were received from the investors with

regard to the issuance of AT-1 Bonds by Yes Bank Limited in

respect of its selling. Based on the investigation and possible

violations of the Securities and Exchange Board of India

(Prohibition of Fraudulent and Unfair Trade Practice relating to

Securities Market) Regulations, 2003 (“PFUTP Regulations” for

convenience) a show cause notice dated October 28, 2020 was

issued. The short contention raised is, that the bonds were

initially sold by the bank to the institutional investors and

thereafter the same bonds were sold by these institutional

investors to other investors in the secondary market. The show

cause notice alleges that the Relationship Manager of the Bank

had facilitated the subsequent sale in the secondary market. The

allegation is, that while selling these bonds the Relationship

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Manager did not inform the investors of the risk factor and

therefore there was misrepresentation and fraud.

3. Upon hearing the learned counsel for the parties and upon

a perusal of the impugned order we find that under the Banking

Regulation Act, 1949 the Central Government had declared a

moratorium in March 2020 and thereafter propounded a scheme

pursuant to which an Administrator has been appointed. The

bank is under a rehabilitation scheme and lots of monies are

being pumped in order to revive the bank.

4. We also find that the Relationship Manager have not been

booked. Prima facie, the question as to whether the buyers

were informed of the risk factor with regard to the AT-1 Bonds

can be best explained by the Relationship Managers which were

part of the investigation but were not the noticees in these

proceedings. On the other hand, the members of the Private

Wealth Management Team have been made noticees and they

have been penalized by the impugned order. We also prima

facie find that the risk factor was already existing on the website

and it was in the knowledge of everyone. Considering the

aforesaid, prima facie a case is made out for grant of an interim

order.
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5. We direct the respondent to file a reply within 4 weeks

from today. Three weeks thereafter to the appellants to file

rejoinder. The matters would be listed for admission and for

final disposal on July 30, 2021.

6. Considering the aforesaid, we stayed the effect and

operation of the impugned order against the appellants provided

the appellant bank, namely, Yes Bank Limited gives an

undertaking on behalf of the bank as well as on behalf of the

other appellants who were members of the Private Wealth

Management Team to the effect that in the event of failure of

the appeal the bank would pay the penalty amount within two

weeks from the date of the order. Such undertaking shall be

given to SEBI within 10 days from today. Misc. Applications

for urgent hearing and stay are accordingly disposed of.

7. Parties are directed to take instructions from the Registrar

48 hrs. before the date fixed in order to find out as to whether

the matters would be taken up for hearing through video

conference or through physical hearing.

8. The present matters were heard through video conference

due to Covid-19 pandemic. At this stage it is not possible to sign

a copy of this order nor a certified copy of this order could be

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issued by the Registry. In these circumstances, this order will be

digitally signed by the Private Secretary on behalf of the bench

and all concerned parties are directed to act on the digitally

signed copy of this order. Parties will act on production of a

digitally signed copy sent by fax and/or email.

Justice Tarun Agarwala

Presiding Officer

Justice M. T. Joshi
Judicial Member
21.05.2021 RAJALA Digitally signed
by RAJALAKSHMI
PK KSHMI HDate:
NAIR
2021.05.24
H NAIR 08:08:26 +05'30'