Mallya moves SAT against Sebi's ban for diverting funds worth Rs 1,880 cr

Regulator gave 21 days for USL to provide information on steps taken by the company to recover funds

Beleaguered liquor baron Vijay Mallya has moved the Securities and Appellate Tribunal (SAT) challenging the markets regulator’s order barring him from the securities market for allegedly diverting Rs 1,880 crore from United Spirits (USL).

The Securities and Exchange Board of India (Sebi) had on January 25 passed an order against Mallya and six other entities for violating Sebi’s (Prohibition of Fraudulent and Unfair Trade Practices) regulations.

SAT adjourned the hearing on Friday. This is the second time Mallya’s case has been adjourned by the appellate tribunal. 

The regulator had given 21 days for USL to provide information on the steps taken by the company to recover the money from Mallya and the companies to which the amount was diverted. 

Mallya hit out at the Sebi order. “Allegations of fund diversion out of USL are baseless. USL accounts were approved by top auditors, an eminent board of directors, shareholders,” he tweeted.

Sebi had said the violations were serious and have larger implications on the safety and integrity of the securities market. By diverting substantial funds from USL to companies of the UB Group, Mallya and others have engaged in an act or practice that prima facie operated as a fraud or deceit on the public shareholder/ investors of USL, Sebi had said in a 32-page order.

Citing reports from consultancies PwC and E&Y, which examined transactions involving USL and Mallya-owned UB Group companies, Sebi had said those banned were “prima facie alleged to have committed fraudulent and unfair activities, prohibited under various sections of PFUTP Act”.  

Sebi also said it was separately examining a settlement agreement of $75 million between Mallya and USL, following which he'd resigned as chairman and director. As on March 2016, Mallya held the chairman’s position in United Breweries, United Breweries (Holdings) and KFA.