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Informist, Monday, Jul. 13, 2026

 

NEW DELHI – The Supreme Court Monday refused to stay a Securities Appellate Tribunal order that had exonerated Bombay Dyeing and Manufacturing Co. Ltd., its promoters and related entities on allegations by the Securities and Exchange Board of India that these had misrepresented financial statements. The apex court issued notices to Bombay Dyeing and others on the market regulator's plea against the appellate tribunal order. "As the impugned order is a split verdict 2:1, we observe that the same shall not be a precedent in similar matters before SAT," it said.

 

The case has its genesis from SEBI's allegation that Bombay Dyeing was involved in a fraudulent scheme to misrepresent its financial statements during financial year (Apr-Mar) 2011-12 to FY17-FY18 by inflating sales of INR 24.93 billion and profits of INR 13.02 billion through transactions with group company SCAL Services Ltd. The market regulator had alleged that the eleven memorandum of understanding signed by Bombay Dyeing and SCAL from 2012 to 2014 for bulk sale of flats and allotment rights in respect of 325 flats were a sham. 

 

The market regulator had barred 10 entities, including Bombay Dyeing and its promoters Nusli N. Wadia, Ness Wadia and Jehangir Wadia, from accessing the securities market and imposed penalties on them. Challenging SEBI's order, Bombay Dyeing and others had moved the appellate tribunal.

 

In January, the appellate tribunal held that the evidence on record does not show that the Memorandum of Understandings signed between Bombay Dyeing and SCAL for booking flats were fake or meant to artificially increase the former's revenue or profits. SCAL actually sold some of these flats to final buyers, which clearly proves that the memoranda were genuine, said the appellate tribunal.

 

"The proof of pudding is in eating and the fact that even in the instant case, no doubts were raised on the genuineness of ultimate sale of flats by SCAL to the buyers is sufficient to justify the bona fide of the MoUs," said the appellate tribunal. The market regulator had not found any abnormal movement in Bombay Dyeing's share price linked to the alleged misstatements, nor had it alleged that the promoters or related entities profited by selling shares at inflated prices, it said. Promoter shareholding remained stable or even increased during the period under scrutiny, it added. The appellate tribunal set aside the penalties imposed on Bombay Dyeing, members of the Wadia family and others, and directed that any amount already paid be refunded within four weeks. Challenging the appellate tribunal’s order, the market regulator moved the apex court.

Shares of Bombay Dyeing and Manufacturing closed 1% higher at INR 129.13 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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