SEBI Slaps Rs.25 Lakh Fine On DB Realty, Promoters And Officials For Misreporting Financials
The Securities And Exchange Board Of India Has Imposed Rs.25 Lakh Fine On DB Realty, Its Promoters And Officials For Financial;
SEBI Slaps Rs.25 Lakh Fine On DB Realty, Promoters And Officials For Misreporting Financials
Strap – They failed to disclose information to stock exchanges under Section 13(2) of the SARFAESI Act
The Securities and Exchange Board of India (SEBI) has imposed Rs.25 lakh fine on DB Realty (now Valor Estate), its promoters and officials for financial misstatements and non-disclosures.
The action followed complaints about misuse of a Rs.225 crore loan from the Bank of India. The entities failed to disclose crucial financials on a loan guarantee.
The capital market regulator imposed Rs.5 lakh each on DB Realty, Vinod Kumar Goenka (promoter, chairperson-managing director, and Shahid Balwa Usman (promoter and managing director). A penalty of Rs.2 lakh each was slapped on Asif Yusuf Balwa, Jayvardhan Vinod Goenka, Salim Balwa Usman, Sunita Goenka and Nabil Yusuf Patel.
SEBI stated that DB Realty failed to comply with accounting standards in preparation and presentation of the financial statements on the guarantee given to the bank. It was given on behalf of the loan availed by Pune Buildtech Pvt Ltd (PBPL), a wholly-owned subsidiary of Marine Drive Hospitality & Realty (formerly DB Hospitality), violating the agreement.
G Ramar, SEBI’s chief general manager said, "I find that event-based disclosures in respect of classification as NPA, invocation of guarantee, symbolic possession of properties, issuance of recall notices etc., are all material information, which should have been appropriately disclosed.”
The regulator observed that Vinod Goenka and Shahid Usman were signatories to financial statements.
They signed the CEO/CFO Certification as required under the norms (for FYs 2013-14 and 2014-15) and disclosure rules (for FY 2016-17 to FY 2020-21).
The two failed to include the material information in the postal ballot notice of the guarantee and security provided for the loan. They misrepresented that the borrower company was fulfilling its obligations of loan repayment.
They also did not disclose information to stock exchanges’ receipt of notice under Section 13(2) of the SARFAESI Act, 2002, invoking guarantee, symbolic possession of company's properties by the bank and receipt of recall notice from the bank.
SEBI noted that Asif Balwa was also a part of the promoter group and one of the personal guarantors to the loan taken by PBPL. A signatory to financial statements, he signed the CEO/CFO Certification.
For non-compliance with the Indian Accounting Standards (Ind AS 109), the certification was false, misleading and flouted the norms.
Similarly, Jayvardhan Goenka, Salim Usman, Sunita Goenka and Nabil Patel being the non-executive and non-independent directors, for FY’s 2013-14 and 2014-15 also violated the rules.
In December 2020, the market regulator received complaints alleging that PBPL took a Rs.225 crore loan from the Bank of India in 2013 with a corporate guarantee from DB Realty and personal guarantees from Vinod Goenka, Shahid Balwa, and Asif Balwa.
The complainant stated that the loan was misused to clear dues of other group firms instead of its intended purpose. By June 2020, the outstanding amount, including interest, rose to Rs.516 crore.
Subsequently, SEBI carried investigations to ascertain the contravention of regulatory norms.