ADVERTISEMENT

CG Power Case: Tribunal Rejects Appeals Filed By Gautam Thapar, Avantha Holdings

Former CG Power Chairman Gautam Thapar and Avantha Holdings had appealed against a SEBI order barring them from capital markets.

Gautam Thapar, former chairman of CG Power & Industrial Solutions Ltd. and promoter of Avantha Holdings. (Photographer: Pankaj Nangia/Bloomberg News)
Gautam Thapar, former chairman of CG Power & Industrial Solutions Ltd. and promoter of Avantha Holdings. (Photographer: Pankaj Nangia/Bloomberg News)

The Securities Appellate Tribunal has rejected an appeal filed by Gautam Thapar, Avantha Holdings and former officials of CG Power & Industrial Solutions Ltd. against an order by the market regulator that barred them from accessing the capital markets.

The tribunal rejected the appeal as it “found no merit” in it. It also directed the appellants to approach the Securities and Exchange Board of India to obtain all documents required by them to defend their case.

The appellants had earlier this month challenged the “ex parte ad interim” order passed by SEBI in which it alleged that Thapar and other individuals had indulged in serious misstatement of accounts as well as diversion of funds, while at the helm of the power equipment maker.

The market regulator’s action came after news reports indicated a fraud at CG Power. The company later informed the exchanges that some of its assets were offered as collateral without the authorisation of its board and were used for certain related party transactions.

CG Power also detected that its assets and liabilities were understated and its employees had entered into unauthorised transactions. Based on the interactions with company officials and a “preliminary investigation report”, SEBI barred Thapar and other former officials from accessing, buying, selling or being associated with any listed entity in the capital markets.

The market regulator also directed Avantha Holdings to retain funds to the extent of Rs 1,006 crore—receivables remaining to be paid by it to CG Power. To ensure recovery, SEBI restrained Avantha Holdings from disposing, selling or alienating its assets or funds till further orders.

As the findings were preliminary, SEBI told the BSE to direct an auditor to conduct a forensic audit of CG Power and verify if there was any manipulation, misrepresentation in the books of accounts or wrongful siphoning of funds.