The Securities and Exchange Board of India (SEBI) has dropped adjudication proceedings against Major Syed Abdi, a former managing director and chief executive officer of ABG Shipyard Ltd, which is undergoing liquidation, over allegations of flouting equity listing agreements on charges of diversion of funds by the company.
The market regulator also disposed off a show case notice earlier issued on Abdi over the alleged violations.
Through an ex-parte adjudication order issued by SEBI on December 27, 2019, Abdi was found to have violated the listing agreements and a fine of Rs 3 lakh was imposed on him.
The order, however, was set aside by the Securities Appellate Tribunal on February 3 this year, with advice to SEBI to consider the matter afresh and pass appropriate orders after giving Abdi an opportunity of hearing.
In his June 4 order, the adjudicating officer Amit Pradhan noted that the basis of violation, on which the show cause notice (SCN) was issued, relates to the period from 2008-2011, during which account manipulations, as per SCN were observed.
Abdi said he was appointed as ABG Director on January 9, 2014, which was much after the period of violation.
“Therefore, I am inclined to form a view that the alleged violations pertain to the period prior to joining of the Noticee (Abdi) with ABG as Director. Further, as a signatory, the Noticee has filed those documents, which were required to rectify the accounts as pointed out in the Income Tax Settlement Commission order. As such, the violation of the clauses of the equity listing agreement qua the Noticee is not sustainable, since the allegation and charge that the Noticee was party to the alleged diversion of funds, had taken place during 2008-09 and 2009-10, which is prior to the Noticee’s joining ABG as Director on January 9, 2014. In view of the aforesaid, the show cause notice qua the Noticee is disposed of,” Pradhan wrote in the order.