In a setback for Vijay Mallya, the Securities Appellate Tribunal upheld market regulator Securities and Exchange Board of India’s order that had barred him from holding any board position or act as a key managerial person in a listed company.
The SEBI had also barred Mallya from accessing the securities market either directly or indirectly in January this year.
The tribunal dismissed all appeals against the SEBI order saying that considering the gravity of the matter, the market regulator was justified in invoking its extra-ordinary power of passing an ex-parte order.
The tribunal pointed out that SEBI had passed its order based on a prima-facie view and that instead of rushing to appeal, Mallya should have defended himself before the market regulator by availing of the opportunity granted to him.
Besides Mallya, the tribunal also dismissed the appeal of four other former United Spirits Ltd. executives who were also barred from accessing capital markets and holding key managerial positions:
- Sowmiyanaraynan, Assistant Vice President – Accounts
- SN Prasad, Senior Vice President – Finance and Accounts
- Paramjit Singh Gill, President – All India Operations
- Ainapur SR, Divisional Vice President – Accounts
In its January order, SEBI had noted that as part of its investigation, it had looked at financial irregularities, fund diversions and subsequent provisions made by the company. The regulator also sought the modus operandi for these funds diversions, based on the reports submitted by PwC-U.K. and EY. Both these firms were appointed by USL to look into the alleged irregularities in the company.
In their appeal against this order, the petitioners had argued that the SEBI order had violated principles of natural justice as no opportunity of hearing was offered to them. And that SEBI’s charges were based on total surmises, probabilities and conjectures.
The tribunal, in its order, dismissed these arguments and directed the parties to make their case before SEBI within 21 days. It also directed SEBI to consider, on merits, Mallya’s request to continue as chairman of United Breweries Ltd.
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