SAT throws out Gammon appeal against Sebi order

“The board (Sebi) vetted that prospectus and the public issue have gone through. In view of this development… the appeal has become infructuous,” said a SAT bench headed by Justice N K Sodhi dismissing the petitions.

The tribunal observed that Gammon was not a noticee and no proceeding was initiated against it. “Even though no directions has been issued to it in the impugned order not to proceed with its proposed public issue, the board by reason of the impugned order closed the file and did not proceed with the red herring prospectus submitted by it for its comments,” said the SAT bench.

In its order, Sebi had also restrained Gammon Managing Director and other entities from accessing capital market directly and indirectly for a period of one year from December 2006.

The regulator’s direction came after its investigation revealed that “funds off the appellant company (Gammon India Ltd) were used for subscription to the rights issue”. It was also alleged that the funds had been routed through another entity through Nikhita and Devyani for subscription to the rights issue. After investigations, Sebi concluded that the funds of Gammon India had been routed through Nikhita and Devyani for subscription to the rights issue.

This was challenged by Rajan and his company before the tribunal. Later, the SAT in an interim order on March 23, 2007 had directed Sebi to reopen the file of Gammon and to proceed with the red herring prospectus submitted the appellants (company) after which the company was allowed to go with the public issue.