Indian Bank has challenged the Securities and Exchange Board of India
(Sebi) order directing it to pay Rs 70 crore to investors in a mutual
fund scheme-Ind Prakash in keeping with the promised returns.
Sources said the bank has filed an appeal before the Appellate Authority
in the finance ministry. The appeal was filed a few days ago and Sebi
has been informed of the move. The regulator has, however, not yet been
served with a copy of the petition.
The appeal has been filed before the Appellate Authority as only orders
issued after December 16 will be heard by the Securities Appellate
Tribunal, as per a recent legislative change. The Sebi order had been
issued on November 30.
Sebi had given the bank 30 days to implement the order and the deadline
will lapse today. Sebi was informed on Tuesday that the bank had decided
to appeal against the order. The move has taken Sebi by surprise as the
regulator was expecting the bank to make good the commitments. In fact,
Indian Bank officials were recently reported as saying that efforts were
on to find a way to pay investors.
The bank had, during its hearings before the regulator, held that the
returns were merely indicative in nature and not assured returns and,
hence, it was not binding on the bank to pay investors accordingly. The
bank also said it was strapped for cash and the government had refused
to extend any further help to meet the redemption dues. Despite the
stand taken by the bank, the sponsor to the scheme floated by its mutual
fund arm, Sebi chairman D R Mehta had ordered that it make good the
commitment to investors.
