Vedanta had announced a buyback of 17.09 crore equity shares at up to Rs. 335 per share but ultimately bought back only about 3.67 crore shares for Rs. 1,225.45 crore. SEBI alleged the announcement was misleading and made without genuine intent to complete it, invoking the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, while Vedanta argued that SEBI's own release of its buyback escrow showed there was no fraud.
A bench of Justices J.B. Pardiwala and K.V. Viswanathan held that release of the cash escrow deposited under Regulation 15B(8) of the Buyback Regulations does not bar a separate, independent fraud inquiry under the PFUTP Regulations, but remanded the fraud question itself to the Securities Appellate Tribunal for fresh decision within six months, since neither the Adjudicating Officer nor SAT had engaged with disputed discrepancies in the underlying trading data.
Companies cannot treat SEBI's release of a buyback escrow as closing the door on fraud scrutiny of the same buyback announcement — a PFUTP inquiry into the company's true intent at the time of announcement can proceed independently and on its own evidentiary track.