SAT quashes Sebi's order banning Tree House Education and Accessories, its officials

The Securities Appellate Tribunal (SAT) on Thursday set aside markets regulator Sebi's order banning Tree House Education and Accessories and its officials from the securities market in a matter related to alleged misstatement of financials of the firm. Rajesh Bhatia, Geeta Bhatia, Giridharilal S Bhatia, and Hiten Trivedi are the officials from whom the ban is lifted.

"However, we uphold the direction relating to a forensic audit of Tree House. Appellants shall extend full cooperation to enable the auditor to complete the forensic audit at the earliest," the tribunal said. Taking cognizance of several media reports alleging irregularities in functioning and operations of TreeHouse in December 2016, Sebi had initiated an investigation for the period from April 1, 2011, to June 30, 2017.

In an interim order passed in March 2018, the regulator had banned the company and its officials from the securities market till further orders. Sebi confirmed its directions through order in November 2018. However, SAT said that "an ex parte interim order is required to be passed in order to curb further mischief or to stop large scale exercise of possible mischief of tampering with the securities market."

In the instant case, no case of urgency was made out in the first instance for grant of an ex parte interim order, the tribunal noted. Sebi had also directed NSE to appoint an independent auditor or audit firm to conduct a detailed forensic audit of the books of accounts of Tree House from the financial year 2011-12 onwards.

In this regard, SAT noted "as on date, nothing has been shown on record to indicate any finding through interim audit report with regard to the manipulation of books of account or siphoning off the funds of the company. The forensic audit is still underway." "In the result, we quash and set aside the impugned orders (both the confirmatory order dated November 16, 2018, and ad interim ex parte order dated March 7, 2018) as far as the direction restraining the appellants from dealing in the securities market in any manner," SAT said.

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