Bengaluru-based Sobha has settled Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) case with the market regulator by paying ₹2.925 crore. Following this, the adjudication proceedings initiated against Sobha, three Executive Directors and CFO have been disposed of, SEBI said in a notice on Monday.
Earlier, the market regulator initiated proceedings against the company and its top honchos after conducting an investigation into certain transactions carried by Sobha with DK Shivakumar (DKS) and his family members/associates that were allegedly against the interest of the minority shareholders of Sobha.
The examination was conducted for FY17, FY18, and FY19.
Besides three executive directors - Ravi Puthan Naduvakkat Chentha Maraksha Menon, Jagdish Chandra Sharma, and Ramakrishnan Prabhakaran, SEBI had carried out investigation against Subhash Mohan Bhat, its Chief Financial Officer.
The settlement order has been passed on Monday and came into force with immediate effect.
Erroneous receivables
It was alleged in the show cause notice that Sobha misrepresented the receivables with regard to the construction of the residence of DKS in FY2016-17, FY2017-18, and FY2018-19 and also the corresponding provisioning for the same during the said period, SEBI said.
This act by Sobha led to the publication of manipulated financial results for FY2016-17, FY2017-18, and FY2018-19, which were untrue and misleading, and operated as deceit not only on the shareholders of Sobha but also on the public being misled about the financial health of the company, SEBI had said in the show cause notice.