Binny Ltd's 4 independent directors settle with Sebi, pay over Rs 42 lakh

All of the independent directors had filed their separate settlement applications on the same date, February 27, 2023.

Four independent directors of Binny Ltd have reached settlement with the market regulator, without admitting or denying the findings in showcause notices issued to each one of them.

They have collectively paid over Rs 42 lakh as settlement fees. Three of the directors--Justice (Retd.) S Jagadeesan, T Manisriram and Dr DVR Prakash Rao--paid Rs 11.05 lakh each and one director--T Radhakrishnan--paid Rs 9.42 lakh.

The market regulator is probing the textile company for misappropriation of funds of more than Rs 850 crore. In August 2023, the Supreme Court had dismissed the company's plea to stay the showcause notice issued by the regulator. This was after the Bombay High Court dimissed the company's plea to stop the regulator's investigation and accept their settlement application.

In the latest settlement orders on the independent directors, the Securities and Exchange Board of India (Sebi) quoted the allegations given in the showcause notice issued to the directors. The allegations on the notice included the failure on the part of the independent directors to exercise due diligence, particularly regarding related party transactions; and for acting on behalf of the management without acting independently in the interest of the shareholders.

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The showcause notices alleged that they had failed in their duties as Audit Committee members.

All of the independent directors had filed their separate settlement applications on the same date, February 27, 2023. Pursuant to meetings with the Internal Committee of SEBI on September 01, 2023 in terms of the Settlement Regulations, the noticees via emails dated September 22, 2023, filed revised settlement terms. The High Powered Advisory Committee in its meeting held on November 2, 2023, considered the directors' proposed terms and recommended the settlement amount for each director.

The Panel of Whole Time Members of SEBI approved the committee's  recommendation on December 15, 2023 and the same was communicated by Sebi to the applicants on December 22, 2023. The directors, via emails dated January 22, 2024, informed about the remittance of the settlement amount, the receipt of which is confirmed by SEBI.