The Securities Appellate Tribunal (SAT) on Tuesday rejected appeals of Eros International Media Ltd, its Managing Director Sunil Arjan Lulla and Chief Executive Officer Pradeep Kumar Dwivedi that challenged Sebi‘s order restraining them from the capital market in a fund diversion case.
“We do not find any reason to interfere with the impugned order at this stage and we dispose of the appeal directing the appellants to file reply/objection along with a stay vacation application to the ad-interim ex-parte order dated June 22, 2023 within three weeks,” the bench of Presiding Officer Justice Tarun Agarwala and Technical Member Meera Swarup said.Eros and its officials had approached the tribunal against an interim order passed by the Securities and Exchange Board of India (Sebi) on June 22.
Sebi, on June 22, had barred media and entertainment firm Eros International Media, Lulla and Dwivedi from the securities markets in a case pertaining to the possible diversion of funds.In addition, Lulla and Dwivedi were prohibited from holding the position of a director or key managerial personnel in any listed company, including Eros International or its subsidiaries, until further orders.Apart from Eros International and its two senior executives, the two promoter entities — Eros Worldwide FZ LLC and Eros Digital Private Ltd — were also restrained by the markets regulator.In its order, Sebi, prima facie, had found that the books of accounts of the company have been overstated and do not present a true and fair picture of its financial health.
“The transactions between the content advance entities and the trade receivable entities, raise the possibility that Eros International was circulating funds whereby amounts transferred as content advances were subsequently recognised as revenue by routing it through trade receivables entities,” Sebi had said.The regulator had also noted that the company was still advancing funds to entities that have been potentially involved in siphoning off funds to entities related to the promoters.