Mr. Suresh Venkatachari vs SEBI
- Court
- Securities Appellate Tribunal
- Case type
- SEBI
- Decided on
- 06-03-2026
IN THE SECURITIES APPELLATE TRIBUNAL AT
MUMBAI
TH
DATED THIS THE 6 DAY OF MARCH, 2026
CORAM : Justice P. S. Dinesh Kumar, Presiding Officer
Ms. Meera Swarup, Technical Member
Dr. Dheeraj Bhatnagar, Technical Member
Appeal No. 88 of 2023
Suresh Venkatachari
24, GA, Rahul Apartment,
st
Cenotaph Road, 1 Street,
Teynampet, Chennai – 600018.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Pradeep Sancheti, Senior Advocate with Mr. Mihir Mody,
Mr. Karthik K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam,
Advocates i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 189 of 2023
SecureKloud Technologies Limited
No. 37 & 38, ASV Ramana Towers,
th
5 Floor, Venkat Narayana Road,
T. Nagar, Chennai – 600017.
…. Appellant
2
By Mr. P.N Modi, Senior Advocate with Ms. Shruti Rajan, Mr.
Anubhav Ghosh, Mr. Rushin Kapadia, Mr. Vivek Shah, Mr.
Paras Taneja, Advocates i/b Trilegal for the Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Pradeep Sancheti, Senior Advocate with Mr. Mihir Mody,
Mr. Karthik K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam,
Advocates i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 190 of 2023
Mr. R. S. Ramani
th
364-b, 5 Main Road, Vijaya Nagar,
Velachery, Chennai – 600042.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
3
With
Appeal No. 191 of 2023
1. Mr. Gurumurthi Jayaraman
G-1, Mangalajyothi, 43,
th
4 Trust Cross Street,
Mandaivelipakkam, Raja
Annamalaipuram, Madaiveli,
Chennai – 600028.
2. Padmini Ravichandran
th
No. 15, 6 Cross Street,
Karapagam Garden, Adyar,
Chennai – Tamil Nadu 600020.
…. Appellants
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 313 of 2023
S. Ravichandran
th
No. 15, 6 Cross Street,
Karapagam Garden, Adyar,
Chennai – Tamil Nadu 600020.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
4
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 314 of 2023
Thyagarajan R.
Kashyap Apart,
First Floor, No. 32, Giri Road,
T. Nagar, Chennai – 600017.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 315 of 2023
G. Sri Vignesh
rd
No. 10/13, Norton 3 Street,
5
Mandalveli,
Chennai – 600028.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 316 of 2023
Dinesh Raja Punniamurthy
No. 125/63, Jammi Buildings,
Royapettah, High Court,
Mylapore, Chennai – 600004.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
6
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 317 of 2023
Swasti Bhowmick
South City Residency, Tower 2,
24C, 375, Prince Anwar Shah Road,
Kolkata 700068.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
With
Appeal No. 318 of 2023
Babita Singaram
1&2/9a, Abinav Palace, Jeth Nagar,
st
1 Main Road, A Puram,
Chennai – 600028.
…. Appellant
By Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh, Mr.
Vivek Shah, Mr. Paras Taneja, Advocates i/b Trilegal for the
Appellant.
7
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
… Respondent
By Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Karthik
K.P., Mr. Aavish Shetty, Mr. Vijay Chockalingam, Advocates
i/b. M/s. K. Ashar & Co. for the Respondent.
THESE APPEALS ARE FILED UNDER SECTION 15T OF
SEBI ACT, 1992 TO SET ASIDE ORDERS DATED
SEPTEMBER 14, 2022 PASSED BY AO, DECEMBER 16,
2022 PASSED BY WTM AND JANUARY 20, 2023
PASSED BY AO, SEBI.
THESE APPEALS HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON FEBRUARY 2, 2026, COMING ON FOR
TH
PRONOUNCEMENT OF ORDER THIS 6 DAY OF MARCH
2026, THE TRIBUNAL MADE THE FOLLOWING:
ORDER
Per : Dr. Dheeraj Bhatnagar, Technical Member
The first group of four appeals are filed by M/s. Secure
Cloud Technologies Limited, (“Company” for short) and its
three KMPs. Out of this, the Appeal No. 189 of 2023 is filed
by the Company. Appellant in Appeal No. 88 of 2023, Mr.
1
Suresh Venkatachari is the promoter and CMD of the
company. The Appellant in Appeal No. 190 of 2023 Mr. R S
Ramani has served as Whole Time Director and CFO of the
1
Chairman and Managing Director
8
company. The Appeal No. 191 of 2023 is filed by Mr.
2
Gurumurthi Jayaraman the CEO of the company during the
inspection period and Ms. Padmini Jayaraman.
These appellants have been imposed penalty under
3
Section 15A(a) and 15HB of the SEBI Act 1992 and all
these four entities have also been charged with penalty
4
under Section 15HA for violation of PFUTP Regulations read
with Section 12A of the SEBI Act vide the learned WTM
order dated December 16, 2022.
The second set of six appeals are filed by employees of
the company. Appeal No. 313 of 2023 is filed by Mr. S.
5
Ravichandran, the CFO of the company till 2018 (and
whole-time director till 2019), who has been imposed
penalty under Section 15HB. Mr. Dinesh Raja Punniamurthy,
the chairperson of the Audit Committee and Mr. R.
Tyagarajan, the CFO of the company have filed Appeal No.
316 of 2023 and Appeal No. 314 of 2023, respectively,
against the penalty imposed under Section 15A(a) and
15HB. The Appellant in Appeal No. 317 of 2023, Swasti
Bhowmick and Appellant in Appeal No. 318 of 2023, Babita
Singaram have filed against levy of penalty under Section
15HB. Further, appellant in Appeal No. 315 of 2023, G. Sri
Vignesh, has filed appeal against penalty under Section
15A(a). Being arising from the common impugned order,
for the sake of convenience these appeals are being decided
by this common order.
2. Brief facts of the case as under:-
2
Chief Executive Officer
3
Securities & Exchange Board of India Act, 1992
4
SEBI (Prohibition of Fraudulent & Unfair Trade Practices relating to
Securities Market) Regulation, 2003
5
Chief Financial Officer
9
The appellant company is a listed tech company
engaged in providing cloud-based services, blockchain
services, cyber security, etc.
On receipt of several complaints against the company
alleging inflation of financial statements, the SEBI
initiated investigation into the affairs of the company
for Financial Year 2017-18 to 2020-21.
Investigation revealed that the company had
appointed M/s Deloitte Haskins & Sells LLP (‘ Deloitte ’
for short) as its statutory auditor on September 30,
2017. In the audit report for FY 2018-19, Deloitte
pointed out serious irregularities in financial
statements of the company. They filed a report with
the Ministry of Corporate Affairs (‘MCA’ for short) on
September 13, 2019. Later, Deloitte resigned on
November 15, 2019. The Company thereafter
appointed M/s. PKF Sridhar & Santhanam LLP (“PKF”
for short) on July 23, 2019 to conduct forensic review
of its books of accounts. However, before PKF could
submit report, another forensic auditor namely KPSN
& Associates (‘KPSN’ for short) was appointed.
SEBI appointed M/s. Grant Thorton Bharat LLP
(‘Grant Thorton’ for short) to conduct forensic audit of
the company on March 25, 2021. The forensic audit
report dated June 14, 2022 suggested that the
company was booking fictitious revenue through three
entities controlled or managed by its promoters/
directors and there was no actual sale to these
entities nor any payment received from them.
10
Based on the findings of the investigation, an ex-parte
ad interim order was passed on August 4, 2022,
issuing certain directions against the appellants.
Subsequently, appellants were allowed inspection of
documents on September 13, 2022. The respondent
conducted hearing on October 18, 2022 and
considered replies to SCN dated October 4, 2022,
following which impugned orders have been passed.
In the impugned order, the charge of manipulation of
books of accounts and financial statement was upheld
and the company, its KMPs and key employees
responsible for preparing the books of accounts were
charged. Accordingly, penalty under Section 15A(a),
15HB and 15HA was levied.
Being aggrieved, appellants have filed these appeals.
3. Mr. Pesi Modi, learned senior advocate made
submissions on behalf of the appellants. Mr. Pradeep
Sancheti, Ld. senior advocate represented the respondent.
4. With regard to the Allegation No. 1 regarding
overstating of revenue and receivables through booking
fictitious transactions with 3 entities, namely, Ensys, Idol &
Intuit, Mr. Modi submitted that the appellant had entered
into a Master Service Agreement with a company by the
name NSIT which was to act as a sub-contractor/vendor to
provide services to the appellant company’s clients. The
appellant and NSIT (as Service Provider) had entered into
tri-partite agreements with each of the said customers
(Ensys, Idol and Intuit) to provide certain IT services such
as migration from in-house storage servers to cloud storage.
11
There were clear division of responsibilities between the
Appellant and NSIT for providing services to these
customers. Invoices were raised on the customers by the
appellant for services by the Appellant through NSIT. The
agreements with the said customers were genuine and were
signed with the said customers since 2015-16.
4.1 It was submitted that in terms of the agreements with
the said customers, services were duly provided to them by
the appellants. Reliance was placed on the duly executed
agreements. Further, it was submitted that the total
revenue from the alleged customers is only 8.5% while
91.6% pertains to overseas subsidiaries. The appellant also
submitted that Mr. Suresh Venkatachari made no false
submissions and cannot be held liable for false certification.
Similarly, Mr. Ramani has also disclosed his interest and,
therefore, there is no case made out for levy of penalty for
violation of Regulation 48 of LODR Regulations.
4.2 With regard to the Allegation No. 2 relating to the
appellant’s two overseas subsidiaries, namely, Securekloud
Technologies Inc. (STI) and Blockedge Technologies Inc.
(BTI) booking fictitious revenue from their customers Sutter
Health, Kaiser, Medidata & Shire, Mr. Modi submitted that
the aforesaid four entities are legitimate clients of the above
two foreign subsidiaries, to whom services were duly
provided and in lieu, some payments were made by them.
These subsidiaries in the USA are duly audited, and there
are no adverse findings by their respective auditors. In fact,
one of the step-down subsidiaries of the Appellant, Health
Care Triangle Inc., USA was listed on the NASDAQ in
October 2021 and during the listing process, relevant
information pertaining to group companies were reviewed
12
and no adverse observations were made. Further, neither
SEBI nor the forensic auditors appointed by SEBI carried out
audit of the said subsidiaries or the customers of the
subsidiaries.
4.3 Regarding the Allegation No. 3 relating to over-
statement of expenses including consultancy charges that
were capitalised to inflate the balance sheet, Mr. Modi
submitted that there were genuine agreements with the
vendors which have been ignored in the Impugned Order.
Time-sheets and invoices of the vendors prove that genuine
services in the nature of software development for
customers based in the USA were provided by them and
payments were made to them in this regard. Regarding
writing-off assets or impairment of assets, it was submitted
that the same was a business decision of the company. For
a technology company such as the appellant, most business
assets have a relatively short lifespan and hardware/
software have to be regularly written off and replaced.
4.4 With regard to the Allegation No. 4 of siphoning of
funds from the Appellant Company by its MD&CEO Mr.
Suresh Venkatachari, Mr. Modi submitted that the allegation
has no basis, and on the other hand, Mr. Venkatachari is
entitled to receive dues from the company. The company
had availed a working capital/loan facility of Rs. 25 Crore
from IFCI Ltd. (a Public Sector Undertaking) during February
27, 2017 and October 1, 2018. To secure the said loan, Mr.
Venkatachari had mortgaged his own personal immovable
property and also pledged 25,75,000 shares held by him in
the Appellant Company. Since the market price of the
shares had fallen, IFCI invoked the pledge and sold shares
for about Rs. 10.99 Crore and appropriated the same
13
towards the Appellant’s outstanding loan facility. The Board
of Directors of the Appellant company at a meeting held on
November 13, 2018, noted the above facts and recorded
that the MD&CEO had to be compensated.
4.5 Further, the company had also hired an immoveable
property from Mr Venkatachari and booked security deposit
of Rs. 1.40 Crore and an amount of Rs. 2.43 Crore towards
renovation cost of the premises. However, as the said
property was still not fit to use, it was resolved at another
Board meeting held on April 10, 2019, to adjust the
aforesaid dues of Rs. 3.83 Crore from the MD&CEO against
the amount of Rs 10.99 Crore payable to him. Thus, there
was no siphoning off by the MD&CEO. It is completely
incorrect to held in the Impugned Order that the building
was not constructed and that the funds were siphoned off by
the MD & CEO. In any event, on a without prejudice basis,
the MD&CEO has returned the entire Rs. 3.83 Crore to the
Appellant through the overseas subsidiary of the appellant.
5. The appellants in Appeal Nos. 313 to 318 of 2023
submitted as follows :-
5.1 On behalf of the appellant in Appeal No. 313 of 2023
(S. Ravichandran), it was submitted that he had acted
diligently and dutifully discharging his responsibilities and he
cannot be held liable for violation, if any, committed by the
company. Appellant cannot be made vicariously liable for
disclosure violations of the company.
5.2 On behalf of the Appellant in Appeal No. 314 of 2023
(Thyagarajan R.), it was submitted that SEBI has erred in
holding that he is liable for a false CFO certificate and failed
to consider that even the statutory auditors of the company
14
have audited the financial statements. Appellant cannot be
made vicariously liable for the acts of the company. He has
not made any false submissions and the SEBI has
misinterpreted his letter dated April 15, 2021.
5.3 Appellant in Appeal No. 315 of 2023 (G. Sri Vignesh)
submitted that he has not concealed any facts or made any
false representation to the SEBI. SEBI has mis-interpreted
the contents of the communication dated July 13, 2020.
The company was never in receipt of the report prepared by
PKF, as its services were disengaged and the same was
communicated by the company. Therefore, the appellant
was not in position to provide copy of report to SEBI.
5.4 On behalf of the Appellant in Appeal No. 316 of 2023
(Dinesh Raja Punniamurthy), it was submitted that he had
duly carried out independent due diligence and did not
provide any false representation to the SEBI. In the present
case, the allegation pertains to the subsidiaries, in which the
appellant is not a director and has no control over the affairs
of the said subsidiaries. Appellant has not concealed the
appointment of KPSN in its letter dated February 29, 2020.
It was also submitted that services of PKF were disengaged
due to laxity of PKF in preparing the report. Further, the
independent directors cannot be held liable for day to day
affairs of the company.
5.5 On behalf of the Appellant in Appeal No. 317 of 2023
(Swasti Bhowmick), it was submitted that SEBI has erred in
holding that she is liable for false ‘CFO certificate’ and failed
to consider that even the statutory auditors of the company
have audited the financial statements. Appellant cannot be
made vicariously liable for the acts of the company. She has
15
not made any false submissions before the SEBI and it has
mis-interpreted the letter dated April 15, 2021.
5.6 On behalf of the Appellant in Appeal No. 318 of 2023
(Babita Singaram), it was submitted that she had duly
carried out independent due diligence and did not provide
any false representation to the SEBI. In the present case,
the allegation pertains to the subsidiaries where the
appellant is not a director nor has any control over their
affairs. Appellant has not concealed the appointment of
KPSN in its letter dated February 29, 2020. The same was
addressed by the company stating that the services of PKF
were disengaged due to laxity in preparing the report.
Further, independent directors cannot be held liable for day
to day affairs of the company.
6. In response, Mr. Pradeep Sancheti, Ld. senior advocate
and Mr. Sumit Rai, Ld. advocate for the respondent made
detailed submissions. With regard to the Allegation-1
regarding inflation of financial statements, it was submitted
that the Tripartite Agreements said to have been signed by
the company with its three customers (Ensys, Idol and
Intuit) and the vendor namely NSIT, were submitted to
SEBI. On metadata analysis, such agreements were found
to have been created after SEBI asked for submission of
such agreements. Further, on perusal of these agreements,
it was found that on behalf of the company, these
Agreements were signed by Mr. S. Ravichandran, Vice
President– Operations of the company, who in his statement
dated March 9, 2022 before SEBI has stated that he never
interacted with NSIT and no vendor agreements were signed
by him with NSIT, whereas he was responsible for signing of
such agreements with other customers of the company.
16
Further, none of the said tri-partite agreements were
stamped or sealed, nor registered. Therefore, the
agreements were not genuine.
6.1 Regarding the alleged booking of overstated fictitious
expenses and payments to Vendor (NSIT), he submitted
that the company was making vendor payments to NSIT for
providing services to Ensys, Idol and Intuit. However, it was
found that NSIT was managed and controlled by R. S.
Ramani through his employee. The company was not able to
produce any documents pertaining to transactions with
NSIT.
6.2 Regarding the allegation-2 regarding booking fictitious
revenues by the two foreign subsidiaries of the appellant
company, namely, STI and BTI from Sutter Health, Kaiser,
Medidata & Shire, Mr. Sancheti submitted that the above-
mentioned transactions were not genuine and no actual
services were provided to them. Fake email IDs and domain
names were created in their names. Further, some of the
entities were managed or controlled by Mr. Suresh
Venkatachari and Mr. R. S. Ramani.
6.3. Regarding the alleged manipulation of books of
accounts and financial statements by overstatement of fixed
assets and consultancy charges ( allegation–3 ), Mr. Sancheti
submitted that the appellant company was capitalizing
fictitious expenses towards development of software to
portray a bigger size balance sheet. The company was
booking payment to 10 vendors for “consultancy charges” or
for “development of intangible assets”. These vendors were
fictitious or were entities managed/controlled by Suresh
Venkatachari and RS Ramani. Further, Mr. Lakshmanan
17
Kannappan, Chief Operating Officer of the Company, in his
statement to SEBI said that he was not aware about the
above-mentioned vendors.
6.4 Mr. Sumit Rai, learned advocate for the SEBI
submitted that in appeal Nos. 313 to 318 of 2023 filed by
the six employees, the allegations are based on specific
reference to the obligations cast on Board of Directors, Audit
Committee, CFO, and/or Compliance Officer. The role of
these individuals is particularly glaring in the present case
as express red flags were raised by the Statutory Auditors of
the Company but all these appellants chose to ignore the
same and did not comply with express provisions of LODR
Regulation and SEBI Act.
6.5 With regard to the underlying fraud in the financial
accounts of the company and company’s attempt to mislead
SEBI about the PKF report and KPSN Report, the facts and
findings being identical to the WTM Order, he submitted to
adopt the submissions made by Mr. Pradeep Sancheti in
other appeals. He submitted that the Appellants have
clearly violated the LODR Regulations by defeating the
objectives of investor protection and ensuring market
integrity. Considering the role and responsibility of the
appellants and obligations cast upon them under the
Regulations, the violations committed by them deserve
imposition of monetary penalty proportionate to the default.
The penalties imposed upon the appellants are
commensurate with the violations committed by them.
Therefore, no interference is warranted.
7. We have carefully considered the rival submissions and
perused the records placed before us.
18
7.1 On careful consideration, we find merit in the
allegation Nos. 1, 2 and 3. The findings of the SEBI in
respect of manipulation of books of accounts/ financial
statements by the appellants by recognizing fictitious sales
and receivables were earlier reported to MCA by Deloitte,
the statutory auditors appointed by the appellant company
itself. Subsequently, a forensic auditor appointed by the
appellant (PKF) also proceeded ahead with the investigation.
However, the appellant company discontinued with its
services. Later, Grant Thorton furnished a forensic audit
report to SEBI on June 14, 2022.
7.2 The forensic audit as also the findings of the statutory
auditors and the SEBI, clearly establish the modus operandi
used by the appellants for inflating its financial statements
through its subsidiaries and related entities as also certain
entities under control of the KMPs/Directors of the company.
The genuineness of the tripartite agreements, which is the
fulcrum of allegation-1, statedly signed for providing
services to three entities, (Idle, Intuit and Ensys) through
the vendor NSIT, does not stand proved. NSIT was under
control of Mr. Ramani, the Whole Time Director through an
employee of the Tamil FM 89.5 channel (under control of Mr.
Ramani), namely, Ms. Gayatri Nurani Iyer. Allegedly, no
genuine services were provided by NSIT to these three
entities and no payment was made in respect of the same.
The revenue recognized in the books of the appellant was
eventually written off as bad debt in respect of these three
entities or was set off against the amounts payable to the
said NSIT for providing technical services to these three
entities. Further, Mr. S. Ravichandran the VP-operations,
who was responsible for signing such agreements, has
19
categorically denied having signed any such tripartite
agreements with NSIT. When confronted, the company was
not able to produce any documents relating to transactions
with NSIT. The appellant did not exercise the option of his
cross-examination.
7.3 With regard to the allegation-2 of booking fictitious
revenue with US subsidiaries, namely, Securekloud
Technologies Inc. (STI) and Blockedge Technologies Inc.
(BTI) in respect of their customers, namely, Sutter Health
Group, Kaiser Research Lab, Medidata Solutions Inc. and
Shire Lab Systems, the appellants could not substantiate the
claim of providing services by its foreign subsidiaries.
7.4 We note that SEBI has taken into consideration
overall picture, taking into account the affairs of US-based
subsidiaries. It is discovered by SEBI that Sutter Health
Group and M/s. Idol are one and the same. Idol was a
company owned by STI, and there is a common KMP Mr.
Shibuke, between Idol and STL, and therefore, Sutter Health
was held as an entity owned and managed by Suresh
Venkatachari and R. S. Ramani only. It was ascertained that
no actual services were provided to Kaiser Research Lab,
and the revenue booked in its name was fictitious. The
agreements provided in the name of Medidata were also
found to be not genuine, and the company was found
booking fictitious revenue by creating fake domain names
and email IDs in its name. Likewise, no actual services given
to Shire Lab Systems, from whom fictitious revenue was
booked by creating fake domain names and email IDs. None
of these allegations have been effectively replied to by the
appellants. Further, there are no details of the nature
20
of services provided to the overseas clients nor is there any
independent evidence in this regard.
7.5 We find no weight in the argument of the appellants
that its subsidiaries in USA are duly audited, and no adverse
finding was recorded by the respective auditors, considering
the connections established by SEBI in paragraph No. 7.4,
which shows that the subsidiaries of the appellant company
were used as a device to inflate revenues.
7.6 SEBI has also alleged that the company was booking
consultancy charges to 10 vendors for development of
intangible assets. These vendors were either fictitious, or
were entities managed/controlled by Suresh Venkatachari
and R. S. Ramani. In fact, Lakshmanan Kannappan, COO of
the company had admitted in his statement that he had
never heard of these vendors. The investigation suggested
that in the names of these 10 entities, appellant created
fictitious email IDs and domain names, through which bogus
recognition of revenue was made.
7.7 In view of the above evidences on record, as supported
by the evidence of the company's own KMPs, and based on
extensive forensic audit by eminent audit firms such as
Deloitte and Grant Thorton, and in the absence of any
formidable evidence rebutting the same we find merit in the
allegation that the appellants fraudulently inflated the
financial results and balance sheet of the company from
Rs. 44 Crores to Rs. 997 Crores within a short period of 5
years, through a well laid out web of subsidiaries and
entities under control of Directors/KMPs to mislead the
investors. Under the circumstances, we find the allegations
of the SEBI against the company as proved. In view of the
21
above, the directions issued against the company and the
penalty levied on it stand confirmed.
7.8 With regard to Mr. Suresh Venkatachari, it is noted
that he was the key person behind the group, being the
CMD and group CEO as also a member of the stakeholder
relationship committee during the investigation period.
Keeping in view his role and responsibility as CMD and CEO,
it was his responsibility to ensure that the financial
statements of the company are correct, which give accurate
picture to the investors. We also note that he made false
representations to SEBI, stating that no report was received
from PKF while it was available with the company and failed
to disclose overseas subsidiaries and his interest in such
subsidiaries. Further, he is also held in violation of LODR
Regulations for non-disclosure of initiation of forensic audit
by SEBI. In view of the above, we uphold the directions
issued by SEBI against him and also confirm the penalty
levied on him for these violations.
7.9 With regard to Appellant No. 3, Mr. R S Ramani, it is
noted that he was the Whole Time Director and CFO of the
company and in violation of his roles and responsibilities, he
played a direct role in the fraud, as evident by the emails
exchanged between him and Mr. Suresh Venkatachari. He
had control over NSIT through one of his employees, but
failed to give correct information to SEBI about his
involvement with NSIT, which was an entity intended to
provide bogus billing. Under the circumstances, the
directions issued against him as also the penalty levied upon
him are confirmed.
8. With regard to Appellant No. 4, Mr. Gurumurthi
Jayaraman, we note that he was the Chairman of the Audit
22
Committee. Instead of playing an important role of an
independent director and as a member of the audit
committee which is the watchdog for investors, he was
involved in the manipulation and assisted the
management in inflating the financials. Further, he raised no
objection on the decision of the management of the
company to write off Rs. 750 Crores from the balance sheet.
Under the circumstances, we find no fault in the directions
issued against him as also the penalty levied against him by
the SEBI.
8.1 The six employees of the appellant have filed Appeal
No. 313 to 318 of 2023, against the order of the learned AO
dated January 20, 2023. We find that no directions have
been issued against them and only penalties have been
levied with regard to falsification of accounts under Section
15A and under Section 15HB for violation of provisions of
LODR Regulations. Out of these six officials, Dinesh Raja
Punniamurthy has been imposed with the penalty under
Section 15AA and 15HB both. Similarly, Thyagarajan R.,
CFO, has also been imposed with penalty under Section
15HB and 15A(a). G. Sri Vignesh, the Compliance Officer
and Company Secretary has been imposed with penalty of
Rs. 5 Lakh for violation under Section 15A(a) for falsification
of accounts. Similarly, Independent Director, Ms. Babita
Singaram, who is also a member of Audit Committee, S .
Ravichandran, Whole Time Director, and Swasti
Bhowmick, CFO, have been imposed with penalty under
Section 15HB for violation of LODR Regulations. In
our considered view, all these officials have been rightly
found to be in violation of LODR Regulations and/or SEBI
Act, as the case may be, and the amount of penalty
imposed is rightly determined considering their respective
23
roles and responsibilities. In view of this, penalty against
these officials is confirmed.
8.2 The direction No. (v) calls for the appellant company to
recover an amount of Rs. 3.83 Crores from Mr. Suresh
Venkatachari, the CMD of the company, with whom the
company had entered into an agreement for hiring an
immovable property. In this regard, the SEBI’s investigation
found out that such property was not in a habitable state
and, therefore, held that the amount of security deposit of
Rs. 1.40 Crores as also and an amount of Rs. 2.43 Crores
for renovation were bogus expenditures. Therefore, the
company was directed to recover the same from Mr. Suresh
Venkatachari.
8.3 Mr. Modi submitted that the company had borrowed a
loan of Rs. 25 Crore from IFCI. Mr. Suresh Venkatachari had
guaranteed the loan by pledging his shares in the Company.
The Company could not repay the debt. IFCI recovered the
outstanding loan by selling the shares pledged by Mr.
Suresh Venkatachari. In the result, he had lost his shares
and Company had to compensate him. The Company, in its
Board meeting dated November 13, 2018 resolved to repay
to Mr. Suresh Venkatachari. Subsequently, in the Board
meeting April 10, 2019, it was resolved to adjust the sum of
Rs. 3.83 Crores payable by Mr. Suresh Venkatachari to the
Company with the amount payable by the Company.
8.4 Mr. Modi submitted that in addition, Mr. Venkatachari
has already repaid an amount of Rs. 3.83 Crores through its
overseas subsidiaries to the appellant. However, SEBI is not
satisfied with the said contention and directed the Company
to recover Rs. 3.83 Crore from Mr. Suresh Venkatachari.
24
The Board resolution dated April 19, 2019 clearly indicates
that Board had decided to adjust the amount payable by Mr.
Suresh Venkatachari against the sum of Rs. 13.95 Crores
which the company owed to him. Thus, there is no dispute
with regard to pledging of his shares by Mr. Suresh
Venkatachari and the Company resolving to compensate him
with Rs. 13.95 Crores. In the background, direction to
recover the further sum of Rs. 3.83 Crore from Suresh
Venkatachari is wholly superfluous and unnecessary and
hence, the said direction is liable to be set aside.
9. Mr. Pesi Modi submitted that this Tribunal may consider
the proportionality of the amount of penalty levied under
various Sections. In our considered view, the modus
operandi used by the company and its KMPs, is in utter
disregard to the integrity of securities market and misleads
investors. The appellant company disregarded the findings
of its own statutory auditors and replaced them rather than
acting on their observations. Under the circumstances,
considering the grave violations of PFUTP Regulations, LODR
Regulations and the provisions of SEBI Act, we uphold the
quantum of penalty on the company, its three KMPs and six
employees.
10. In view of the above, the following order :-
ORDER
(1) Appeal No. 189 of 2023 is allowed in part.
The direction against SecureKloud to recover
Rs. 3.83 Crores from Mr. Suresh
Venkatachari is set aside. Remaining portion
of order is undisturbed.
25
(2) The Appeal Nos. 88 of 2023, 190 of 2023,
191 of 2023, 313 of 2023, 314 of 2023, 315
of 2023, 316 of 2023, 317 of 2023 and 318
of 2023 are dismissed.
(3) All Interlocutory Application(s) are disposed
of.
(4) No cost.
Justice P. S. Dinesh Kumar
Presiding Officer
Ms. Meera Swarup
Technical Member
Dr. Dheeraj Bhatnagar
Technical Member
06.03.2026
PTM
MRS
PRAMILA
Digitally signed
by MRS PRAMILA
Date: 2026.03.09
12:56:33 +05'30'