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SAT stays trading restrictions on JKumar, Prakash Industries (Eds: Adding new paras after para 9, para 20)

Press Trust of India  |  Mumbai 

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

Sebi, on August 7, asked stock exchanges to restrict trading in of 331 "suspected shell companies", some of which have 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 Investigation Office (SFIO) and the Department.

JKumar Infraprojects and had moved the SAT against the directions.

Following their appeals, the SAT has stayed the trading restrictions imposed on the two companies and these can resume normal trading tomorrow.

"In the facts of these two appeals, we are prima facie of the opinion that the impugned communication issued by 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 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. The member has sought additional information from the companies.

"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.

Following the SAT order, BSE and NSE said trading in JKumar Infraprojects and would resume tomorrow.

of these companies would be moved out of GSM (Graded Surveillance Measures) framework and made available for trading with effect from August 11, the exchanges said in similarly-worded circulars.

The two stocks would be allowed to trade in a price band of 20 per cent.

In its order, the tribunal said it is apparent that 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 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 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.

The Sebi's counsel submitted that in the current case, it has merely implemented the directions received from the corporate affairs ministry and no independent investigation has been carried out by the regulator.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, August 10 2017. 21:28 IST
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