Reiterating its interim directions passed last year, wherein the promoters were barred from the securities markets and the company's board was asked to furnish bank guarantees, Sebi has said in a latest order that these guarantees can be provided in rupees for an equivalent amount.
This option has been provided by Sebi after it was submitted before the regulator by the directors that "being the resident Indians they can purchase foreign exchange up to only $200,000".
Confirming the directions issued through ad interim ex-parte order dated March 25, 2013, Sebi's whole-time member Rajeev Kumar Agarwal said in his latest 35-page order that he was "of the considered view that no intervention is called for, at this stage, in either vacating the interim directions or modifying it".
In that interim order, Sebi had restrained the company's promoters from accessing the securities market and prohibited from buying, selling or dealing in securities, directly or indirectly, till further directions.
Besides, Sebi had also asked the Zenith board to provide a bank guarantee of $33.93 million, an amount equivalent to the funds that have been diverted from the company, without using the funds or assets of the firm.
The six promoters -- Chairman Rajkumar Saraf, Managing Director Akash Saraf, Vu Technologies, Zenith Technologies, Devita Saraf and Vijayrani Saraf -- were also asked to file their replies, if any, to Sebi within 21 days.
However, the noticees preferred an appeal before the Securities Appellate Tribunal, which set aside Sebi's interim order on July 23, 2013.
Sebi challenged the SAT order through an appeal before the Supreme Court, which on August 27, 2013 issued notice and stayed the operation of SAT order. In September, the Supreme Court also dismissed an interim application for modification of its order and extended the time period for furnishing of bank guarantees from 30 days to 40 days.
As the case continued in the courts and at Sebi, the apex court directed Sebi on March 3, 2014 to give a hearing to Zenith board and listed the matter for further hearing on March 24. Subsequently, oral and written submissions were made before Sebi by the board of directors of Zenith.
After going through these submissions and other details, Agarwal said he was of the view that "the noticees have not been able to make out a prima facie case for revocation or modification of the interim order and the material available on record justifies the continuation of the directions passed against them under the ad interim ex-parte order dated March 25, 2013".