A special bench of the Sessions Court in Greater Mumbai on Monday allowed the company and its promoters to compound the alleged offences under Sebi’s consent mechanism, confirming that the payment of Rs 3,56,50,000 made on September 9 had formally settled the matter. “No reasonable ground are there to differ from the opinion given by the SEBI in consenting to compound the offence against the applicants/accused,” the court said in its order.
Court clears path for closure
The special court noted it found no “arbitrariness” in the recommendation of Sebi’s High-Powered Advisory Committee (HPAC), which had advised both parties to settle the case for Rs 3.56 crore. With the payment confirmed, the court has effectively lifted all restrictions imposed on the company and its directors.
The court’s decision comes more than twelve years after Sebi’s interim order of March 2013, which accused Zenith Infotech and its directors of improper disclosures, diversion of funds, and asset stripping in connection with a default on foreign currency convertible bonds (FCCBs). That order had barred the company and its promoters from accessing the capital markets.
Clean chit after extensive probe
However, after an extensive multi-year probe, including information obtained from overseas banking authorities such as the Monetary Authority of Singapore, Sebi found no evidence of siphoning, asset stripping, or insider trading by the promoters or directors. A 2018 order by a whole-time Sebi member reaffirmed these findings and declined to impose any disgorgement, concluding that no personal or illegal gain was made.
Following the 2018 order, the matter was taken up for resolution through Sebi’s consent mechanism, which enables settlement without admission or denial of guilt.
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