Bombay HC dismisses Amit Goenka’s plea in opposition to Sebi order in Shirpur Gold Refinery case

The Bombay Excessive Courtroom has dismissed a petition filed by Amit Goenka contesting the Securities and Trade Board of India’s (Sebi) appointment of KPMG as a forensic auditor to probe alleged fund siphoning at Shirpur Gold Refinery.

In its 2021 communication, Sebi had appointed KPMG Assurance and Consulting Providers as a forensic auditor to evaluate the monetary statements of Shirpur Gold Refinery Ltd. for the fiscal years 2018-2019 by way of 2020-2021. KPMG had submitted a report in March 2023.

The market regulator, in an interim order dated April 25, 2023, accused debt-ridden Shirpur Gold of fund diversion. Goenka served as the corporation’s non-executive chairman in 2021–22.

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“We don’t discover any justifiable cause assigned by the petitioner (Amit Goenka) within the writ petition for the belated problem being raised to the appointment of KPMG as forensic auditor on 13 September 2021,” a bench comprising justices Rajesh S Patil and AS Chandurkar stated in an order that was uploaded Thursday.

The excessive courtroom stated that Goenka was free to pursue the matter earlier than Sebi in accordance with the regulation.

Sebi’s interim order was prompted by a February 2021 criticism, alleging that loans taken by Shirpur Gold Refinery weren’t used for firm operations but have been siphoned off to firms below the management of Subhash Chandra, chairman emeritus of Essel Group, and his household. The criticism additionally alleged that Shirpur had failed to offer public shareholders data relating to its operations, leading Sebi to research the matter.

On 25 April 2023, the markets regulator issued a show-cause discover cum interim order in opposition to Amit Goenka, Shirpur Gold Refinery, and 5 others for alleged fraudulent practices and manipulation of monetary statements.

In its order, Sebi, by way of its whole-time member Ashwani Bhatia, directed that the entities should not dilute or promote their holdings in Shirpur. Sebi famously said that Shirpur had allegedly devised a scheme to divert funds from debtors to entities inside the promoter group.

“It seems that the primary cause for Shirpur’s defaults to lenders is non-receipt of funds from its debtors amounting to 404 crore. The identical seems to be a part of a well-designed scheme devised by promoters to maneuver the funds out of Shirpur and switch to their accounts, whereas misusing the IBC course of,” Bhatia had stated within the order.

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Pradeep Sancheti, senior counsel representing Goenka, argued earlier than the excessive courtroom that KPMG was ineligible to submit a forensic report because it didn’t meet the eligibility standards prescribed below Sebi’s tender.

He additionally contended that KPMG’s report, submitted on 21 March 2023, couldn’t be thought of as a ‘forensic report’ as directed, noting the absence of a compulsory Distinctive Doc Identification Quantity (UDIN) and that KPMG was not listed as a registered agency with the Institute of Chartered Accountants of India (ICAI).

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On behalf of Sebi, senior counsel Mustafa Physician argued that if any hostile order was handed in opposition to Goenka, he had the choice to enchantment. The physician emphasized that the problem with the forensic auditor’s appointment was merely a tactic to delay proceedings, provided that Goenka had not challenged the interim order, regardless of it being a quasi-judicial order.

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