However, SAT reduced the quantum of penalties imposed by Sebi.
The tribunal said there was no legal infirmity in the enquiry of the Securities and Exchange Board of India against Sunday Exports as "requirement of framing a Code of Conduct for prevention of insider trading by the companies is a mandate of law and nobody can be allowed to violate the same".
The tribunal reduced the penalty imposed on the company from Rs two lakh to Rs one lakh and from Rs two lakh to Rs one lakh on the two whole time directors, Pravinchandra Dashrathbhai Patel and Fulian Ashvin Reshamwala.
In November 2012, Sebi had imposed total a penalty of Rs 4 lakh on SEL and its two directors for delay in framing the model code of conduct for prevention of insider trading.
Besides, the regulator said it has slapped a total penalty of Rs 2 lakh on SEL for delay in framing the internal policy on code of conduct for prevention of insider trading as well as for not disclosing its quarterly financial results to the stock exchange with the prescribed period of 15 minutes after the conclusion of the board meeting.
SEBI's order was challenged by SEL and its directors and promoters before the tribunal.
The Sebi order was upheld by SAT which observed that "... the requirement of conveying the Board's important decisions to the Stock Exchange within 15 minutes is a crucial provision binding on the company."
"The same is having an underlying object which can only be achieved by quick communication of the said decision by the company to the Stock Exchange," the tribunal added.