The Securities Appellate Tribunal on Monday quashed SEBI’s order against three promoter entities of GEE Ltd in a case related to alleged fraudulent dealings in shares of the company.

In January 2013, SEBI slapped a total penalty of Rs. 27 lakh on Vidhya Finvest, Sanwarmal Agarwal and Shankarlal Agarwal for allegedly indulging in manipulative trades in GEE shares.

Shankarlal Agarwal is also the Managing Director of GEE, while Sanwarmal Agarwal is the Executive Director of the firm.

The entities had challenged SEBI’s ruling in the case with the Securities Appellate Tribunal (SAT).

Accordingly, SAT in its order said SEBI’s order “is quashed” as “none of the charges of violations of SEBI Act or regulations are proved against the appellants [3 promoters]”.

SAT noted that placing orders within the range allowed by bourses was as per market practice unless it is with connected parties, done for self-trading or circular trading to manipulate volume and hence price of scrip.

“Here, in this case counter-party is not specified hence sale/purchase of GEE scrip was in accordance with market practice and mechanism, price was paid, delivery taken etc., and hence allegation of manipulation of scrip GEE by appellant, cannot be sustained, but this has not been accepted by [SEBI] adjudicating officer,” the SAT order said.

It also said that placing buy bids below ‘Last Traded Price (LTP)’ did not create buy pressure, since total trade in scrip was very less and no big number of investors bought the shares of GEE.

The case relates to SEBI’s probe into trading in shares of GEE between April 28-August 31, 2009.

It was alleged by the regulator that the three promoters along with the entities of one “Sanganeria Group” dealt majorly in the scrip during the period of probe.

SEBI had said that the three entities had contributed to the increase in the LTP of the company and also created artificial buying depth in the market by placing the orders significantly away from the market price.