Market watchdog Sebi on Thursday fined IL&FS Transport Network Ltd and three individuals a total of Rs 1.75 crore for breaching various norms and provisions of accounting standards.

The regulator is investigating the case after observing alleged breaches of norms in certain related party transactions in the form of loans the company borrowed in the 2015-16, 2016-17 and 2017-18 financial years.
A fine of Rs 1 crore has been imposed on IL&FS Transportation Networks Ltd (Noticee 1), and a fine of Rs 25 lakh has been imposed on three persons – Ramchand Karunakaran (Noticee 2), Dilip Bhatia (Noticee 3) and Krishna Garg (Noticee 4). In a 42-page order, Sebi said the noticee violated the provisions of LODR (Listing Obligations and Disclosure Requirements) Regulations, Uniform Listing Agreement, Equity Listing Agreement and Accounting Standards.

According to Sebi, Karunakaran, Bhatia, and Garg relied entirely on the company’s internal processes and did not use their judgment before signing a compliance certificate or ensuring confirmation by applicable law. “Even if auditors submit reports to them, they are responsible for ensuring that those reports comply with applicable regulatory requirements and not blindly rely on the reports they receive.

“As admitted by noticee 2, it has relied solely on such reports for issuing the certificate of compliance and has not exercised its judgment before issuing it. Noticees 2-4 have obligations under the LODR and are expected to perform their duties with due diligence. However, they have failed to fulfil these duties,” Sebi said.