Zenith Infotech (ZIL) chairman Rajkumar Saraf has denied any wrongdoing by the company's promoters, in response to allegations by the Indian regulators they had pocketed the proceeds of asset sales earmarked to pay off the firm's US$83 million debt.
According to minutes from a March 28 annual general meeting released on Monday, Saraf said Zenith Infotech would challenge the Securities and Exchange Board of India (SEBI)'s decision to impose a trading ban on the six promoters.
"The promoters have not done anything that would be construed as a violation under the SEBI Act," Saraf noted. He added the company's promoters had in fact not dealt in the company's shares in the past three years as reflected in public records on the exchange.
SEBI had imposed a securities trading ban on the company's six promoters -- Rajkumar Saraf (chairman cum director), Akash Kumar Saraf (managing director), Devita Saraf, Vijayrani Saraf, VU Technologies, and Zenith Technologies.
Challenging SEBI's jurisdiction
Saraf told the shareholders gathered at the AGM in Mumbai last month that SEBI did not have the jurisdiction to order the trading ban because of a pending legal action by ZIL creditors.
In 2011, ZIL foreign currency convertible bond owners initiated action in the Bombay High Court, aiming to recoup US$83 million owed by the Indian cloud services provider.
The company and the promoters have been legally advised that the said SEBI Order is beyond the jurisdiction of SEBI as these matters are already pending before the High Court, Saraf said.
"The winding up petition has not yet been admitted by the High Court and are still in the initial stages, pending admission," the chairman added.
ZIL has appealed to the Securities Appellate Tribunal to set aside the SEBI order.
Saraf did not directly address the SEBI order that the six promoters personally guarantee a US$33 million bank loan by April 23.
SEBI has not responded to request for comment about whether the ZIL promoters have guaranteed the bank loan. Zenith Infotech has not responded to repeated requests for comment.