SEBI relieves Tata Motors with a warning in 18-year old case

10 Jun 2022 , 09:27 AM

SEBI has excused Tata Motors Limited giving it a warning to be more careful in its future dealings in the securities markets.

SEBI stated that any unfavorable order against the company at this stage may not practically serve any purpose for the events accrued over 18 years ago. This is mainly because the company ‘TFL Finance’ which bought the rights issue has been merged with Tata Motors Limited 17 years ago, and therefore, does not exist.

The case pertains to a backdated transaction in the scrip of Global Telesystems Limited (now known as GTL Ltd.) and Global E-Commerce Services Ltd., an unlisted company that merged with GTL in 2001.

Further, the regulator outlined that the present board of directors of the company is entirely different from all the directors of TFL, who all have been retired from the board.

Tata Motors was not the only one on SEBI’s radar this time. It also warned Niskalp Infrastructure Services (formerly Niskalp Investment and Trading Ltd.), to be more cautious in its dealings ahead.

Under the case, it was alleged that Tata Finance Limited did not disclose the true and correct facts to the investors and circulated an untrue and misleading statement of facts about the financials of Niskalp, which was one of the subsidiary companies of TFL, in its rights issue offer letter.

SEBI’s order followed a complaint received in October 2002 from Tata Finance, underlining instances of irregular transactions in securities on the basis of backdated and fictitious contract notes or bills, for the sale and purchase of shares of Global Telesystems Ltd and Global E-Commerce Services Ltd by DS Pendse and AL Shilotri, who executed the trades on behalf of Niskalp Investment and Trading Ltd. (now known as Niskalp Infrastructure Services Ltd.) and TFL, respectively.

SEBI started an investigation following the complaint to ascertain a possible violation of provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.