A bird flies past the logo of the Securities and Exchange Board of India (SEBI) at its headquarters in Mumbai, India
Reuters
Bengaluru: The Securities Appellate Tribunal (SAT) has granted a stay on the Securities and Exchange Board of India’s (Sebi's) order which had imposed a two-year market ban on realty developer Omaxe due to misrepresentations in the company’s financial statements.
In its judgement dated October 1, SAT said that Omaxe will still have to pay a penalty of Rs 47 lakh to Sebi within four weeks. The next hearing on the matter will be on December 16. If Sebi is able to prove financial misrepresentation in the case of Omaxe, the market ban will be upheld.
“Respondent (Sebi) is allowed four weeks’ time to file a reply. Rejoinder be filed within four weeks thereafter,” said SAT’s interim order.
“SAT’s judgement does not completely overturn Sebi’s order, but there is a stay,” said Dinesh Jotwani, Senior Advocate, Supreme Court of India.
Following Sebi’s order on July 30, Omaxe’s Chairman Rohtas Goel, Managing Director Mohit Goel and four other key managerial personnel had been banned from dealing in the securities market and prohibited from holding any manager or director position in other listed entities for two years.
“Once the penalty is paid, then the stay will be in effect,” said Abhiraj Arora, Partner, Saraf and Partners. He explained, “The penalty amount will be deposited with Sebi, which keeps the money in an interest-bearing account. If Sebi wins, the money will go to the Consolidated Fund of India. If they lose, they will return the money to Omaxe.”
In its order, Sebi had observed Omaxe’s, “practice of deliberate misrepresentation of the company’s financial statements and manipulation of Omaxe scrip price, operated as a scheme to defraud the investors in the securities market.” The financial statements were misrepresented for three years, from 2018-19 to 2020-21.