The Securities Appellate Tribunal (SAT) has asked markets regulator Sebi to pass final order in six months in a case related to CG Power and Industrial Solutions, wherein the company's ex-chairman Gautam Thapar and three other former officials were banned from the securities market.
Besides Thapar, the other officials banned were CG Power former chief financial officer V.R. Venkatesh and former directors Madhav Acharya and B Hariharan.
The SAT ruling comes after Thapar, Hariharan and others moved to the tribunal against a Sebi confirmatory order passed in March 2020, whereby it had barred Thapar, Venkatesh, Acharya and Hariharan "from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further orders".
However, they were allowed to liquidate up to 25% of the value of the securities held by them.
The confirmatory order followed an interim order passed by Sebi in September 2019, which had restrained the officials from the capital markets for "serious" mis-statement of accounts as well as diversion of funds. Besides, it had ordered forensic audit of the company.
Noting that the restraint order is continuing since September 2019, SAT said it cannot be allowed to continue forever.
"Sufficient time is already passed, for the respondent to analyse the forensic report.
"We accordingly direct the respondent (Sebi) to issue the show cause notice, if any, within four weeks from today and thereafter decide the matter within six months from the date of receiving the replies in accordance with law after giving an opportunity of hearing," SAT said in its order passed on April 6.
The Securities and Exchange Board of India (Sebi) had conducted an investigation to ascertain whether there were any violations of the provisions of securities laws by the company and its directors or promoters during the period 2016-2019.
Sebi, prima facie, had noted that chairman along with certain directors, employees of CG Power and related entities, had perpetrated irregularities. These include use of certain assets of the company as collateral, including being co-borrower and/or guarantor, for enabling third parties to obtain loans without due authorisation from the board of CG Power.
They allegedly routed transactions through subsidiaries, promoter-affiliated companies and other connected parties for ultimate benefit of companies related to promoter group.
Further, they allegedly used different accounting heads for concealing payments made by CG Power, facilitated interest free advances to promoter-affiliated companies and entered into dubious transactions.
The regulator, in the interim order, had said the transactions are prima facie "designed to divert/siphon off money from the listed company, which rightfully belongs to its shareholders".
