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SAT refuses to interfere, grant any immediate relief in Eros matter

Directs firm to file a reply within three weeks in case involving alleged siphoning of funds

Eros International Media

Eros International Media

Khushboo Tiwari Mumbai

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The Securities Appellate Tribunal (SAT) on Tuesday refused to interfere and grant any immediate relief to Eros International Media and four others in an interim order issued by the Securities and Exchange Board of India (Sebi), barring them from the securities market.

“The investigation has prima facie revealed siphoning of funds to various entities of the appellant company which cannot be lost sight of and in the absence of any cogent reply being given we also find that some of the content advance entities being not existent also leads to a presumption of diversion of funds in the form of content advance and trade receivable,” noted Justice Tarun Agarwala in the order.

In an order dated June 22, the markets regulator had barred Eros International, its executive vice chairman and managing director Sunil Lulla, chief executive officer Pradeep Dwivedi, Eros Worldwide FZ and Eros Digital for alleged fund to the tune of Rs 687 crore and mis-reporting of financial statement for 2019-2020.

Lulla has also been barred from holding key positions in any listed company, including Eros. Dwivedi has been restrained from holding directorship in any listed company other than Eros.

The tribunal has directed Eros and other entities to file their replies or objections to Sebi within three weeks. Sebi has been directed to provide a hearing opportunity within a week from filing of reply and pass the order after three weeks of the hearing.

Sebi conducted a detailed investigation in the matter based on a preliminary report by National Stock Exchange (NSE). SAT has observed that during the ongoing investigation, Sebi found out that the company had written-off a sum of Rs 1,320.4 crore towards content advance given to 87 entities out of which Rs 1,172.4 crores are related to 18 entities.

The company had written-off the entire outstanding amount in the financial year 2019-2020 even before the expiry of the agreement period and without any remedial measures of recovery. Sebi, in its investigation, has found that some of the entities are only paper companies with no business operations.

In its order, the market regulator had also directed BSE to conduct forensic audits of three BSE listed companies namely, Thinkink Picturez, Mediaone Global Entertainment, and Spicy Entertainment Media. These companies have been prima-facie found to be part of the alleged fund diversion.

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First Published: Aug 22 2023 | 4:56 PM IST

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