SAT stays trading restrictions on JKumar, Prakash Ind

The Securities Appellate Tribunal Thursday stayed trading restrictions imposed on JKumar Infraprojects and Prakash Industries, which are among the 331 suspected shell companies identified by the government, saying Sebi passed the order without carrying out any probe. Sebi, on August 7, asked stock exchanges to restrict trading in shares of 331 "suspected shell companies", some of which have investments by several well-known domestic and foreign investors.

The move came after the watchdog received the list of such companies from the corporate affairs ministry and many of the 331 firms are under the scanner of the Serious Fraud Investigation Office (SFIO) and the Income Tax Department. JKumar Infraprojects and Prakash Industries had moved the SAT against the Sebi directions. Following their appeals, the SAT has stayed the trading restrictions imposed on the two companies and these shares can resume normal trading from Friday.

"In the facts of these two appeals, we are prima facie of the opinion that the impugned communication issued by Sebi on the basis that the appellants are 'suspected shell companies' deserves to be stayed," the tribunal said in an 11-page order. Along with staying the Sebi order against the two firms, the SAT has also directed stock exchanges to "reverse their decisions". The tribunal noted that the Sebi's whole-time member has heard the firms.