Bombay Dyeing and Manufacturing Company earned a reprieve after the Securities Appellate Tribunal, Mumbai, said it was okay if the company did not consolidate the results of SCAL Services, a company in which it holds 19 per cent.

SEBI had issued a show cause notice alleging Bombay Dyeing had “deliberately designed” the holding structure of SCAL such that, through its indirect holdings, it could exercise control over the entire share capital of SCAL.

If a company holds a 20 per cent stake in another company, the latter becomes an ‘associate company’ and the investor has to consolidate the accounts of both.

SEBI alleged “misrepresentation of financial statements of The Bombay Dyeing by inflating sales of ₹2,493 crore and profits of ₹1,302 crore” from sale of flats to SCAL from financial year 2011-12 to 2017-18.

SAT saw no prima facie case for fraud and “no diversion of funds nor... disproportionate gains or loss” to any investor.

‘Natural force’ in power cut

The appellate tribunal for electricity recently held that disturbances or constraints to power grids is a ‘natural force majeure event’ while setting aside an order of the Central Electricity Regulatory Commission.

In November 2013, the Tamil Nadu Generation and Distribution Corporation Limited entered into a 15-year power purchase agreement with GMR Trading for up to 150 MW between June 2014 and September 2028. GMR Trading, in turn, procured 150 MW from GMR Warora Energy Ltd in Maharashtra. During November to December 2015, power availability was affected due to grid disturbance.

TANGEDCO claimed no party had liability for supply disruption due to grid constraints, but GMR Trading wanted it to pay tariff.

The tribunal observed that ‘natural force majeure events’ are defined as “act of God, including, but not limited to lightning, drought, fire and explosion”, making it an ‘inclusive’ clause.

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