MRN Chamundi pays ₹56 lakh to settle market norms violation case with Sebi

MRN Chamundi Canepower and Biorefineries has settled a case with capital markets regulator Sebi over alleged violations of the Companies Act, after paying Rs 56 lakh towards the settlement amount.

The order came after MRN Chamundi filed a suo motu settlement application under the norms proposed to settle by neither "admitting nor denying the findings of fact and conclusions of law".

"It is hereby ordered that any proceedings that may be initiated for the violations are settled in respect of the applicant (MRN Chamundi Canepower and Biorefineries)," Sebi's whole-time members Amarjeet Singh and Kamlesh C Varshney said in the order on Tuesday.

As per the settlement order, the markets watchdog will not initiate enforcement proceedings against MRN Chamundi Canepower for the violations. However, Sebi retained the right to take further action if any misrepresentation is discovered or if the company breaches any terms of the settlement.

The violations pertained to the allotment of equity shares to more than 49 individuals by two entities -- Nirani Sugars and Shri Sai Priya Sugars -- which later got merged with the applicant company by virtue of a composite scheme of amalgamation approved by the National Company Law Tribunal (NCLT) on January 10, 2024.

According to Sebi, Nirani Sugars had allotted shares to farmers during the financial years 2005-06, 2010-11, 2012-13, and 2013-14.

The allotments were found to be in contravention of the Companies Act, 1956, the order said.

Similarly, Shri Sai Priya Sugars had also allotted shares to more than 49 persons in FY 2013-14, raising concerns over non-compliance with the rules, it added.

Following the merger, the applicant provided an exit opportunity to existing eligible shareholders and settled their dues through an escrow account.

In response to the alleged violations, MRN Chamundi Canepower and Biorefineries filed a compounding petition with the Bengaluru bench of NCLT.

Thereafter, the tribunal passed a final order, imposing a compounding fee of Rs 64.88 lakh.

Subsequently, the company engaged with the Securities and Exchange Board of India's (Sebi) internal committee to negotiate a settlement and filed proposed revised settlement terms of Rs 56 lakh.

The proposal was approved by Sebi's High Powered Advisory Committee in December 2024 and recommended that matter be settled.

Accordingly, MRN Chamundi Canepower and Biorefineries paid the amount and settled the matter with Sebi.

In a separate settlement order on Tuesday, Sebi said Quadrant Future Tek and its promoters -- Mohan Krishnan Abrol and Vivek Abrol -- have settled an alleged violation related to delayed disclosure of share transactions by paying Rs 3 lakh towards the settlement fee.

Quadrant Future Tek and its promoters have filed suo motu settlement applications for the alleged violation of ICDR (Issue of Capital And Disclosure Requirements) rules.

The company had filed its draft red herring prospectus in June last year.

However, a transaction involving transfer of 4 lakh equity shares between the promoters in September 2024 was not disclosed within the required 24-hour period, resulting in a 31-day delay.