July 25, 2019

Securities Appellate Tribunal Directs SEBI To Investigate Alleged Violation Of The Companies Act By Cairn India

[ By Bobby Anthony ]


Capital market regulator Securities and Exchange Board of India (SEBI) has been directed by the Securities Appellate Tribunal (SAT) to investigate alleged violation of the Companies Act by Cairn India.

SAT has directed the SEBI to investigate the alleged violation which was pointed out by Cairn UK Holdings.

The SAT stated in its recent order dated July 19 that if Cairn India had violated provisions of the Companies Act in by releasing dividend when there was no embargo upon it, it is SEBI's duty to inquire into the alleged violation.

The SEBI is duty bound to take action against the company if necessary, under Section 124 of the Companies Act, the SAT order stated.

Earlier, Cairn UK Holdings had earlier approached SEBI in 2017 in connection with non-payment of dividend which was due to it by Cairn India amounting to Rs 340.64 crore.

Shortly thereafter, SEBI had disposed of the complaint by Cairn UK Holdings on the ground that the unpaid dividend of over Rs 660.63 crore was handed over by Cairn India to Income Tax authorities.

According to the SEBI order, the amount was handed over to Income Tax authorities and hence it would not be appropriate for the capital market regulator to take any further action.

After this development, Cairn UK Holdings which is the appellant, moved SAT.

In its complaint to the SAT, Cairn UK Holdings prayed that Cairn India be directed to pay the dividend to the appellant along with interest at the rate of 18% per annum.

Cairn UK Holdings also prayed that legal proceedings be initiated against every director of Cairn India who were knowingly parties to non-payment of dividend to the appellant under Section 127 of the Companies Act.

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