NEW DELHI: Capital markets regulator Sebi on Tuesday slapped fines totalling Rs 25 lakh on eight entities, including DB Realty, its promoters and other officials, for violations related to financial misstatements and non-disclosures.
The regulator imposed a fine of Rs 5 lakh each on DB Realty Ltd (now known as Valor Estate), Vinod Kumar Goenka (Promoter and Chairperson-MD of DB Realty), and Shahid Balwa Usman (promoter and MD), according to a Sebi order.
Sebi also levied a penalty of Rs 2 lakh each on Asif Yusuf Balwa, Jayvardhan Vinod Goenka, Salim Balwa Usman, Sunita Goenka and Nabil Yusuf Patel.
In the final order, Sebi stated that DB Realty failed to comply with accounting standards in preparation and presentation of the financial statements in respect of guarantee given to Bank of India (BOI) on behalf of loan availed by PBPL which has resulted in the violation of the listing agreement/disclosure rules.
“I find that event-based disclosures in respect of classification as NPA, invocation of guarantee, symbolic possession of properties, issuance of recall notices etc, are all material information which should have been appropriately disclosed,” Sebi’s Chief General Manager G Ramar said in the final order.
Sebi noted that Vinod Goenka and Shahid Balwa Usman were signatories to financial statements as well as signed the CEO/CFO Certification as required under the norms (for FYs 2013-14 and 2014-15) and disclosure rules (for FY 2016-17 to FY 2020-21).
Both of them failed to include the material information in the postal ballot notice in respect of the guarantee and security provided for the loan and misrepresented in the postal ballot notice that the borrower company was fulfilling its obligations of repayment of the loan, Sebi said.
Further, Vinod and Shahid failed to disclose material events/information to stock exchanges viz., receipt of notice under section 13(2) of SARFAESI Act 2002, invoking guarantee, symbolic possession of company’s properties by Bank of India and receipt of recall notice from the bank, it added.
Sebi also observed that Asif Balwa was also a part of promoter group and was one of the personal guarantor to the loan taken by PBPL.
Further, he (Asif Yusuf Balwa) was a signatory to financial statements as well as signed the CEO/CFO Certification as required under the rules for FY 2017-18 to FY 2020-21.
In view of the non-compliances with Indian Accounting Standards (Ind AS 109) in preparation and presentation of the financial statements, the certification was false and misleading, thereby flouting rules, the order said.
Jayvardhan Vinod Goenka, Salim Balwa Usman, Sunita Goenka and Nabil Yusuf Patel being the non-executive and non-independent directors for FY 2013-14 and 2014-15 also violated the rules.
The order came after the Sebi received complaints in December 2020 alleging that Pune Buildtech Pvt Ltd (PBPL) took a Rs 225 crore loan from Bank of India in 2013 with a corporate guarantee from DB Realty Ltd (DBRL) and personal guarantees from Vinod Kumar Goenka, Shahid Balwa, and Asif Yusuf Balwa.
The complainant had also claimed the loan was misused to clear dues of other group firms instead of its intended purpose and by June 2020, the outstanding amount, including interest, had risen to around Rs 516 crore.
PBPL is a wholly-owned subsidiary of Marine Drive Hospitality & Realty Pvt Ltd (formerly known as DB Hospitality).
Thereafter, the regulator commenced an investigation into the matter for the period between April 2013 to March 2021 to ascertain the possible contravention of regulatory rules.
