MUMBAI — A special court in Mumbai has allowed Zenith Infotech Ltd and directors Rajkumar Saraf and Akash Saraf to settle a Securities and Exchange Board of India (SEBI) case for a consent fee of ₹3.56 crore, closing a long-running proceeding tied to allegations that followed the company’s 2011 asset sale and subsequent default on foreign currency convertible bonds (FCCBs).
The company and its promoters paid ₹3,56,50,000 on 9 September, according a statements from the Zenith.
SEBI‘s action stemmed from events after shareholders authorised Zenith in January 2011 to sell assets to redeem FCCBs due in 2011 and 2012. In September 2011 the company announced the sale of its managed services division to a U.S. entity linked to the Zenith brand.
Zenith Infotech SEBI case
Bond redemptions did not follow, triggering disputes with creditors and multiple proceedings. SEBI’s interim order of 25 March 2013 alleged improper disclosures and restrained the promoter group from accessing the market pending inquiry.
Separately, the Bombay High Court in December 2013 ordered winding up of Zenith Infotech in proceedings involving FCCB holders, adding to the company’s legal overhang.
Following the 2013 interim action, SEBI issued a confirmatory order in 2014 and continued proceedings. In March 2018, a whole-time member recorded findings that there was no evidence warranting disgorgement for siphoning or insider trading, while holding the company and promoters liable for disclosure-related breaches and imposing a two-year market access bar at that time.
Appeals and related directions from the Securities Appellate Tribunal and Supreme Court occurred during this period.
How Zenith Infotech settlement was reached
SEBI’s consent mechanism allows settlement of specified proceedings without admission of guilt on payment of a fee recommended by its High-Powered Advisory Committee (HPAC). In this matter, the HPAC advised settlement at ₹3.56 crore.
A special bench of the Sessions Court in Greater Mumbai has now permitted compounding of offences on that basis, and records show the amount has been deposited.
Zenith Infotech’s equity trading was suspended by the National Stock Exchange with effect from 21 November 2014. On the eve of suspension, indicative quotes showed the shares at ₹2.60 on the NSE and ₹2.75 on the BSE on 20 November 2014, according to exchange notices and archived market data.
The stock had fallen sharply from a high of ₹556.05 to ₹2.60, eroding almost all shareholder value.
The consent payment ends SEBI’s enforcement proceeding referenced in the court order. It does not affect other civil or creditor actions, nor does it constitute admission of wrongdoing.
For investors, the settlement provides regulatory closure to a matter that began with the 2011 asset sale and FCCB default, but it does not in itself restore trading or address past losses.
