Shriram Transport Finance moves Madras High Court to challenge ED order of Rs 5 cr fine

Shriram Transport Finance Company (STFC) along with directors of erstwhile Shriram Holdings (Madras) Pvt Ltd has moved the Madras High Court challenging an Enforcement Directorate order imposing Rs 5 crore fine in a case of alleged irregularities in issuance of warrants. "The company and the directors of the erstwhile Shriram Holdings (Madras) Pvt Ltd (SHMPL) have filed the writ petitions in the Madras High Court challenging the order dated March 4, 2020 of Directorate of Enforcement," Shriram Transport said in a regulatory filing on Friday.

On March 10, STFC had informed the exchanges that the Enforcement Directorate (ED) through the March 4 order had imposed a penalty of Rs 5 crore in relation to an old case of issuance of warrants in 2006. The matter is related to issuance of warrants by erstwhile SHMPL, which was amalgamated with STFC in April 2012, to a person resident outside India in 2006. SHMPL had issued warrants to the extent of Rs 243.60 crore which were converted into equity shares within the stipulated limit.

After a show cause notice from ED, the company had  represented itself with relevant information and facts that it was of the bona fide view that it had not contravened any of the provisions of the Foreign Exchange Management Act (FEMA). "However, the company received an order dated March 4, 2020, from ED on March 9, 2020. The order imposes on the company a penalty of Rs 5 crore in connection with the matter citing contravention of provisions of Section 6(3)(b) of FEMA, 1999, read with Regulation 4 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000," STFC said in its March filing.

In this regard, ED has also levied penalty of Rs 50 lakh each on three persons, the then directors of the erstwhile SHMPL, it had informed. STFC stock closed 7.46 per cent higher at Rs 685.35 on BSE.