SAT Directs SEBI To Probe Violation Of Market Norms By Vedanta-Led Cairn India
The Securities Appellate Tribunal has directed regulator Securities and Exchange Board of India to look into the alleged violation of market norms by Cairn India, a subsidiary of Vedanta Ltd., with regards to withholding of dividends payable to Cairn U.K. Holdings.
The order came after Cairn U.K. Holdings Ltd. filed an appeal with SAT against an order passed by SEBI.
In 2017, the U.K. based firm had approached SEBI over non-payment of dividend amounting to over Rs 340 crore by Cairn India and had appealed to the capital markets regulator to direct Vedanta's subsidiary to pay the dividend along with an interest of 18 percent per annum.
In the appeal, Cairn U.K. Holdings had asked to "initiate proceedings under...Companies Act against every director of the Cairn India who were knowingly a party to the non-payment of the said dividend".
However, SEBI disposed of the complaint on the ground that the unpaid dividend of over Rs 660.63 crore was handed over by the company to the income tax authorities and, therefore, it would not be appropriate for SEBI to take any further action.
In its order dated July 19, SAT held that while SEBI was justified in holding that question of paying the dividend does not arise since the amount had been transferred to the income tax, it is the regulator's duty to inquire into the alleged violation of Companies Act by Cairn India. Thereby the order said, "in our opinion, it is open to the appellant to pursue his remedies for return of the dividend amount from the income tax authorities."
Further, the order said "we accordingly, allow the appeal in part and dispose of the appeal directing SEBI to reconsider the complaint of the appellant dated...in relation to violation of the provisions of the Companies Act and Listing Obligations and Disclosure Requirements Regulations and pass appropriate orders."