The Securities Appellate Tribunal through its order dated June 29, 2016, overturned the order of SEBI directing Tijaria Polypipes Ltd. (“Issuer”) to call back the utilized amount from its Initial Public Offer proceeds. SEBI, on June 20, 2014, had passed an order against the Issuer for misstatement in prospectus in relation to the objects of the issue. SEBI had found that the objects of the issue, as given in the prospectus, was to finance a new project by purchase of plant and machinery. The Issuer had instead used a part of the proceeds of the IPO towards repayment of Inter-Corporate Deposits. SEBI held that the Issuer had violated  disclosure requirements by diverting the issue proceeds for objects not disclosed in its prospectus.

Thus, SEBI had directed the Issuer to bring back the IPO proceeds which were utilized for repayment of ICDs. The Issuer had challenged the order in SAT, which held that even if the proceeds of the IPO were diverted for a purpose other than the objects as disclosed in the prospectus, yet, its use was not fraudulent.

SAT noted that since the Non-Convertible Debentures issued by the Issuer were genuine and the Issuer had shown evidence towards repayment of such NCDs, therefore, it would be unviable to recall a payment which was genuine and undisputed. SAT was of the opinion that the Issuer may be found guilty of misstatement in the prospectus, however it reversed the SEBI order directing the Issuer to recall the payment made towards the ICD.