Supreme Court dismisses Amit Goenka’s plea against Bombay High Court order in Shirpur Gold case

The Supreme Court dismissed Amit Goenka’s petition challenging the Bombay High Court’s order to conduct an inquiry into the alleged misappropriation of funds by bankrupt Shirpur Gold Refining Ltd.

Goenka currently serves as President, Digital Business, International Linear Business, Enterprise Technology, Broadcast Operations and Engineering, Zee Entertainment Enterprises Ltd, and will serve as Non-Executive Chairman, Shirpur Gold Refinery from 2021-22.

The Bombay High Court on August 14 dismissed Goenka’s petition challenging KPMG’s appointment as forensic auditors to probe the alleged misappropriation of funds at the Shirpur gold refinery.

A bench of the Supreme Court headed by Justices Hrishikesh Roy and SVN Bhatti on Tuesday said, “Considering the nature of the Division Bench order of the High Court, we do not find any weakness in the order. Accordingly, the petition is dismissed.”

The Securities and Exchange Board of India appointed KPMG Assurance and Advisory Services as the forensic auditor in 2021 to examine the financial statements of Shirpur Gold Refinery from 2018-2019 to 2020-2021.

KPMG submitted its report in March 2023. Subsequently, the market regulator, in an interim order issued on April 25, 2023, accused debt-laden Shirpur Gold of misappropriation of funds.

Sebi’s interim order was prompted by a complaint in February 2021 alleging that the loans obtained by Shirpur Gold Refinery were not used for company operations but were transferred under the control of Essel Group chairman emeritus Subhash Chandra and his family company. Essel Group owns Zee Entertainment.

The complaint also alleges that Shirpur Gold failed to provide public shareholders with information about its operations.

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A division bench of the Bombay High Court said: “We do not find that the petitioner (Amit Goenka) has filed a belated complaint in the writ against the appointment of KPMG as forensic auditor on September 13, 2021. There is no valid reason for questioning,” Rajesh S. Patil and AS Chandurkar had said.

“A well-thought-out plan”

Sebi issued a show-cause notice and interim order on April 25, 2023, to Amit Goenka, Shirpur Gold Refinery and five other companies for alleged fraudulent conduct and manipulation of Shirpur Gold’s financial statements.

According to the order passed by whole-time member Ashwani Bhatia, Sebi prohibited entities from diluting or selling their holdings in Shirpur Gold. Sebi also noted that Shirpur allegedly hatched a plan to transfer debtors’ funds to entities of the promoter group.

“The main reason for Shirpur’s default on its lenders appears to be the failure to receive from the debtor the equivalent of $404 Crores. This appears to be part of an elaborate scheme by the promoters to divert funds from Shirpur to their accounts while abusing the IBC process. “Bhatia said in the order.

Sebi gave Goenka and others 21 days to submit responses or objections.

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‘Not a forensic report’

In the Bombay High Court, Amit Goenka’s senior counsel Pradeep Sancheti said KPMG was not eligible to be asked to submit a forensic report as it was not in compliance with the requirements of the Sebi tender. prescribed eligibility criteria.

He added that the report submitted by KPMG on March 21, 2023, could not be classified as a “forensic report” and did not mention a unique document identification number. The lawyer added that KPMG’s name was not mentioned in the list of companies registered with the Institute of Chartered Accountants of India.

Mustafa Doctor, Sebi’s senior counsel appearing for him, argued that if any adverse order is issued against Goenka, he can appeal.

He added that since Sebi’s interim order was passed based on the report submitted by the forensic auditor and was not challenged, the petition challenging KPMG’s appointment was only to delay the court proceedings.

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