The Madras High Court has barred the promoters of textile company Binny Limited from accessing company funds as the regulators probe an alleged Rs 850-crore scam.
According to a Madras High Court order dated May 16, Binny’s promoter and chairman M Nandgopal and his son and daughter have been restrained from interfering in the day-to-day affairs of the company.
The court order came in response to a case filed by Rajeev Bakshi, an independent director on the board of Binny.
Market regulator the Securities and Exchange Board of India (Sebi) and the Ministry of Corporate Affairs(MCA) are currently probing an alleged fund diversion to the tune of Rs 850 crore between 2014 and 2021, various court filings showed.
Binny is listed on the stock exchanges and has over 11,000 retail investors. The shares of the company are currently on hold due to non-compliance with insider trading rules, BSE data showed.
An email sent to Binny remained unanswered.
“If interim orders are not granted, it would cause irreparable loss to the general public, if any acts detrimental to the interests of the company are indulged into by respondents 2 to 4,” said the Madras High Court.
According to a show-cause notice issued by Sebi dated November 24, 2022, the promoters made at least five suspicious transactions. Firstly, the company made questionable advances to certain related parties to the tune of Rs 329 crore between December 2014 and April 2016. These transactions were not in compliance with the rules.
Binny also extended loans totalling Rs 383 crore to related parties for acquisition of windmills and land parcels. These loans remained unpaid until 2021.
In February , four independent directors of Binny reached a settlement with Sebi and paid a fine of Rs 42 lakh, without admitting or denying guilt in the case.
Bakshi had moved the High Court, requesting it to nullify the appointment of Nandgopal and his children to the board of the company.
The appointment was done through a board meeting dated April 30,2024. However, Bakshi alleged the family members were appointed as additional directors in the company without being nominated by the Nomination and Remuneration Committee as required by law.
According to stock exchange data, the company has seen many changes at the board level in the recent past. Subsequently, the auditors and the company secretary also resigned from the company.
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