sebi:WTM/AN/CFID/CFID-SEC4/30860/2024-25
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Facts / Headnote
Findings of violation upheld; remedial directions issued including restatement of consolidated financial statements for FY 2021-22, penalties imposed payable within 45 days
Provisions invoked
- s. 19
- s. 11B
- s. 12A
- s. 11
- s. 15H
- s. 27
- s. 15J
- s. 15F
- s. 169
- s. 21
- s. 133
- s. 2(27)
- s. 149
- s. 100
- s. 130
- s. 118
- s. 129(3)
- s. 118(10)
- s. 4(2)
- s. 114
Regulations
- Reg. 11
- Reg. 3
- Reg. 4(1)
- Reg. 4(2)
- Reg. 3(b)
- Reg. 201
- Reg. 4(2)(e)
- Reg. 3(d)
- Reg. 30
- Reg. 33
- Reg. 6
- Reg. 33(1)(a)
- Reg. 48
- Reg. 18(3)
- Reg. 17(8)
- Reg. 4(2)(f)(i)
- Reg. 17
- Reg. 25
- Reg. 33(3)(b)
- Reg. 34(2)(b)
Parties
- Royal Orchid Hotels Limited (ROHL)
- Chander Kamal Baljee (CK Baljee)
- Keshav Baljee
- Amit Jaiswal
Holding
ROHL wrongly classified KSDPL as an associate company instead of a subsidiary, resulting in misstated consolidated financial statements for FY 2021-22 showing inflated profit of INR 26.78 crore instead of INR 3.63 crore; Noticees 2, 3 and 4 violated PFUTP Regulations, SEBI Act and LODR Regulations including Regulation 17(8) for false compliance certificate.
Full text
Final Order in the matter of Royal Orchid Hotels Limited Page 2 of 79 share price and enabled Noticee nos. 2 and 3, who were the promoters of ROHL, to offload their shares at elevated prices.
Final Order in the matter of Royal Orchid Hotels Limited Page 3 of 79 promoter group entities, viz. Chander Kamal Baljee and Keshav Baljee, offloaded their holdings and made a total gain of INR 20.83 crore. Based on the findings of the investigation, SEBI passed an interim order cum show cause notice dated March 31, 2023 (“SCN”) and issued directions mentioned therein against ROHL and its promoter / directors viz., Chander Kamal Baljee, Keshav Baljee and Amit Jaiswal.
Final Order in the matter of Royal Orchid Hotels Limited Page 4 of 79 nominate did not constitute the majority on the Board of KSDPL. On the basis of this reasoning, the Company through its notice dated March 04, 2022, informed that KSDPL had ceased to be a subsidiary company of ROHL and was classified as a joint venture company of ROHL. 6.4. Pursuant to the above announcement, ROHL considered KSDPL as an associate company w.e.f. March 02, 2022 (date of appointment of Independent Directors on KSDPL’s Board) and accordingly prepared and published its consolidated financial statements for FY 2021- 22 on May 30, 2022, excluding the financials of KSDPL as a subsidiary from its financial statements. 6.5. During the course of investigation, ROHL was advised to provide detailed explanation for not considering KSDPL in its consolidated financial statements as a subsidiary. In response, ROHL inter alia submitted that based on the “Company Law Opinion” dated March 01, 2022 from G. Shankar Prasad, a Practising Company Secretary and the opinion dated December 01, 2022 given by a firm of Chartered Accountants, S. Ramanand Aiyar & Co., CK Baljee, CMD of ROHL, concluded that KSDPL would cease to be a subsidiary of ROHL and be treated as an associate company under joint venture category w.e.f. March 02, 2022. 6.6. The Holding-Subsidiary relationship is defined in the Companies Act, 2013 under section 2(87) read with section 2(27) and in the Accounting Standard under IND AS 110. 6.7. IND AS 1
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Source: SecMarx — sebi:WTM/AN/CFID/CFID-SEC4/30860/2024-25. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.