CG Power case: SAT rejects Gautam Thapar's appeal against Sebi order

The Securities Appellate Tribunal (SAT) on Tuesday rejected a plea by Avantha Group’s Gautam Thapar against an ex-parte order issued by the Securities and Exchange Board of India (Sebi). This order was issued pertaining to irregularities at CG Power and Industrial Solutions.

“We find no merit in the appeal filed by Gautam Thapar and others. The appellant should now file a reply by October 15. In case the appellant requires any documents from Sebi, a formal request has to be made,” said a SAT Bench led by Justice Tarun Agarwala.

The tribunal directed the capital markets regulator to provide documents with respect to the case, on receipt of Thapar’s request. Thapar had moved SAT against Sebi’s ex-parte order arguing that it was against the principles of natural justice, given that it was based on incomplete findings.  The counsel for Sebi contested the claim, stating that natural justice was not denied to Thapar as the regulator had relied on disclosures made by the company.

In an order dated September 18, Sebi had barred Thapar and three former officials of CG Power for a number of alleged irregularities, including diversion of money.

The market watchdog had said that it was passing an ex-parte ad-interim order to “protect the integrity of the securities market”.

Sebi’s order was passed nearly a month after the CG Power board said the firm had been hit by an accounting scandal, and that liabilities of the group had been understated by over Rs 1,600 crore for FY18.

The regulator had passed the order based on a preliminary investigation report submitted by CG Power. It has ordered a more detailed forensic audit to bring out the “complete picture and the extent of the misappropriation”.