Sebi slaps penalties totalling Rs 1.75 cr on IL&FS Transportation Networks, 3 individuals

SEBI

Markets regulator Sebi on Thursday imposed penalties totalling Rs 1.75 crore on IL&FS Transportation Networks Ltd and three individuals for violations of various norms and provisions of accounting standards.

The watchdog began looking into the case after it observed that certain related party transactions in the form of loans borrowed by the company in the financial years 2015-16, 2016-17 and 2017-18 allegedly violated norms.

A fine of Rs 1 crore has been imposed on IL&FS Transportation Networks Ltd (noticee 1) and Rs 25 lakh each on the three individuals -- Ramchand Karunakaran (noticee 2), Dilip Bhatia (noticee 3) and Krishna Garg (noticee 4). In a 42-page order, Sebi said the noticees have "violated the provisions of LODR (Listing Obligations and Disclosure Requirement) Regulations, Uniform Listing Agreement, Equity Listing Agreement and Accounting Standards".

According to Sebi, Karunakaran, Bhatia and Garg completely relied on the internal processes of the company and did not exercise their own judgment before signing the compliance certificates or ensuring confirmation with applicable laws. "Even though auditors submitted reports to them, it was their responsibility to ensure that such reports were as per the applicable regulatory provisions and not blindly rely on the reports received by them.

"As admitted by noticee no 2, he completely relied on such reports for issuing compliance certificates and did not exercise his own judgment before issuing the certificates. An obligation was cast on noticee nos 2-4 as per LODR Regulations and they were expected to discharge their duties with due diligence. However, they have failed in discharging those duties," Sebi said.