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SAT stays Sebi trading curbs on JKumar, Prakash Industries

SAT stays Sebi trading curbs on JKumar, Prakash Industries
The Securities Appellate Tribunal on Thursday stayed trading restrictions imposed on JKumar Infraprojects and Prakash Industries, which are among the 331 suspected shell companies identified by the government, saying Sebi passed the order without carrying out any probe.

Sebi, on August 7, asked stock exchanges to restrict trading in shares of 331 "suspected shell companies", some of which have investments by several well-known domestic and foreign investors.
The move came after the watchdog received the list of such companies from the corporate affairs ministry and many of the 331 firms are under the scanner of the Serious Fraud Investigation Office (SFIO) and the Income Tax Department.
JKumar Infraprojects and Prakash Industries had moved the SAT against the Sebi directions. Following their appeals, the SAT has stayed the trading restrictions imposed on the two companies.
"In the facts of these two appeals, we are prima facie of the opinion that the impugned communication issued by Sebi on the basis that the appellants are 'suspected shell companies' deserves to be stayed," the tribunal said in an 11-page order.
Along with staying the Sebi order against the two firms, the SAT has also directed stock exchanges to "reverse their decisions". The tribunal noted that the Sebi's whole-time member has heard the firms.
"Since the delay in disposal of the representation is causing serious prejudice to the appellants, we proceed to consider the plea of the appellants for grant of interim relief," the order said.
The tribunal said it is apparent that Sebi passed the impugned order without any investigation.
"As rightly contended by counsel for appellants, letter addressed by the MCA (Ministry of Corporate Affairs) on June 9, 2017, merely required Sebi to investigate as to whether the 331 companies named therein which were suspected to be shell companies, were in fact shell companies and whether the said companies had any credentials or fundamentals...," the order said.
Further, the SAT observed that the very fact that Sebi took nearly two months to comply with MCA directions "clearly shows that there was no urgency in issuing the impugned communication without even investigating the credentials or fundamentals of those companies".
The matter will be heard on September 4.
Agencies

Agencies

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