The Securities Appellate Tribunal on Thursday stayed SEBI’s trading ban order on J Kumar Infraprojects and Prakash Industries, which are among the 331 suspected shell companies identified by the government.

In a late evening circular issued on its website on Monday, SEBI had asked stock exchanges to suspend regular trading in 331 companies.

SEBI said its action was based on a government list that labelled these companies as ‘shell entities’. On Wednesday, SAT had asked SEBI to follow the ‘natural course of justice’ and give a hearing to companies that it had banned from trading.

Finally, SAT decided to stay SEBI’s ban on at least two companies that had actively approached the tribunal. J Kumar Infraprojects and Prakash Industries had moved the SAT against the SEBI directions.

Several of the companies had responded to SEBI’s ban by tagging annual reports and other financials along with their filings to tell the stock exchanges and SAT that they are not shell companies and in compliance with all regulations.

According to a source, the regulator took the drastic step of banning trading in companies as it received the list of shell entities from the Corporate Affairs Ministry and was informed that the companies were under the scanner of the Serious Fraud Investigation Office (SFIO) and the Income Tax Department.

Out of the 331 companies on the list, more than 160 are actively traded shares on the exchanges. Many of them approached SAT.

Hearing on Friday

While Parsvnath Developers had filed its appeal on Wednesday, the tribunal has listed it for hearing on Friday. Similarly, the Gujarat-based Kavit Industries plea will also be taken up on Friday, according to SAT web site.

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