SAT directs Vijay Mallya to appear before SEBI within 21 days [Read Order]

The Securities Appellate Tribunal (SAT), Mumbai directed Vijay Mallya to appear before SEBI within 21 days in person or through a legally authorized person. The Tribunal was looking into Mallya and 6 other Key Managerial Persons (KMP) of United Spirits Ltd. appeal against their ban by the SEBI from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly.

Shri Darius Khambata, counsel for the appellants criticized the SEBI heavily in his arguments for depending upon private reports of auditing firms like PriceWaterhouse Cooper (PWC-UK) and Ernest & Young (E & Y) for passing such interim impugning order and not providing his client an opportunity to be heard, thus violating the principle of natural justice.

However, the Tribunal found the arguments of Shri Rafique Dada, who appeared on behalf of SEBI, more convincing. He argued that the SEBI has “some substantial material” and it is on the basis of this material, that SEBI has come up with such an order. SEBI has also taken the help of information and material available with the two Stock Exchanges, namely – BSE and NSE, regarding the Appellant as well as various connected entities. The material before SEBI, which was gathered in a span of 4 to 5 months clearly revealed huge diversion of funds by Vijay Mallya from USL to other entities, including overseas subsidiaries. They also argued that money still remains untracked and that various agencies of the Government of India like SFIO and CBI are working on it. Further relating the matter, the SEBI sought information regarding the agreement entered by USL with Dr. Vijay Mallya, compliance in relation to Regulation 23 of SEBI (Listing Obligation and Disclosure Requirement) and comments of the Audit Committee, PWC-UK and E&Y, on the above.

Out of the other 6 KMP, Mr. Paramjit Singh Gill, President-All India Operations, USL, was also directed by the Tribunal to appear before SEBI within 21 days. The other appellants in Appeal have brought to the Tribunal’s notice certain facts to distinguish their cases from that of Dr. Vijay Mallya. The CORAM in this matter stated, “Since we are not considering the merits of the matter, all the contentions of the parties are kept open and SEBI shall consider such distinguishing facts, if any, which may be pointed out by these appellants in their replies, and pass appropriate orders on such replies while considering and disposing of the same within four months.”