Karvy case: Bajaj Fin moves SAT to challenge the order of Sebi
Swati Deshpande | TNN
Mumbai Bajaj Finance on Monday he approached the Court of Securities Appeals ( SAT ) challenge Sebi November order that had ordered the depositaries to transfer the shares to the demat accounts of the original shareholders after the Karvy Stock Broking the scandal broke out. The court has reserved its orders for Tuesday.
The Sebi ex-parte (without hearing the other side) order had directed that the securities, which Karvy Broking was alleged to have illegally pledged to raise money, be returned to the broker’s clients. Bajaj Finance's counsel Janak Dwarkadas argued that the company had done its due diligence and hence was not at fault at lending against the pledged securities. He added that the lending was based on a declaration made by Karvy Brokerage that the shares did not belong to their clients.
Dwarkadas said Bajaj Finance would be unsecured to up to Rs 344 crore due to the Sebi order. He also said that the order will have “serious repercussions” on the financial sector as there are other banks and NBFCs in a similar situation.
Sebi Counsel Rafique Dada had said that Karvy Broking ’s demat account was categorised as a client account since 2000 and that both Karvy and Bajaj Finance ought to have known that the shares belonged to clients.
He also cited a June 2019 Sebi circular, which had required separation of securities of clients from that of Karvy ’s. Karvy Broking counsel Vikram Nankani said it would submit to the tribunal’s order. Six other financial entities, including banks, also approached SAT against the Sebi order on Monday and their matters are likely to be heard on Tuesday.