A number of companies, including Parsvnath Developers, JKumar Infraprojects and Prakash Industries, on Wednesday moved the Securities Appellate Tribunal (SAT) against SEBI classifying them as “shell companies,” contesting that their businesses are legitimate.
SEBI said it took the action after receiving the list of companies from the Corporate Affairs Ministry.
Several other firms are expected to take similar recourse to challenge SEBI’s decision asking stock exchanges to restrict trading in 331 firms for being “suspected shell companies“.
JKumar Infraprojects and Prakash Industries told the SAT that their businesses are legitimate and that they are not shell companies. The tribunal asked SEBI as to why the matter was not investigated before issuing the circular. The Securities and Exchange Board of India (SEBI) told the tribunal that it got the information from the Corporate Affairs Ministry and subsequently asked the exchanges to investigate and take action.
Hearing adjourned
The hearing at the tribunal has been adjourned till today. Observing SEBI received the list of companies on June 9 and the circular was issued on August 7, the SAT asked the regulator whether investigation was carried out in the intervening period.
