SEBI v. The Bombay Dyeing & Manufacturing Company Ltd and others (inflated financial statements, 2022)
Judgment entered
Checked against the primary document on October 8, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, in a single reading of the order; an independent second reading of 60 SEBI records agreed on every field for 56, the four misses being penalty amounts; a later sample of 50 of the SEBI records added on 9 October agreed on every field for 46. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.
In a final order of 21 October 2022 a SEBI whole-time member found that Bombay Dyeing's financial statements for 2011-12 to 2017-18 overstated revenue by Rs 2,492.94 crore and profit by Rs 1,302.20 crore through dealings with the unlisted Scal Services. He imposed market bans and penalties totalling Rs 15.75 crore on the company, Scal and eight individuals.
The record
| Agency | SEBI (India) |
|---|---|
| Date filed | 2022-10-21 |
| Date resolved | 2022-10-21 |
| Court | SEBI whole-time member |
| Status | judgment |
| Asset class | equities |
| Instruments | Bombay Dyeing & Manufacturing Company Ltd shares |
| Venue | BSE, NSE |
| Criminal parallel | No |
| Bars imposed | Bombay Dyeing, Nusli Wadia, Ness Wadia, Jehangir Wadia and Durgesh Mehta restrained from the securities market for 2 years, Scal Services and its four directors restrained from the securities market for 1 year, Nusli Wadia, Ness Wadia, Jehangir Wadia and Durgesh Mehta barred from directorships and key management roles in listed companies and SEBI-registered intermediaries for 1 year |
| Defendants | The Bombay Dyeing & Manufacturing Company Limited ; Scal Services Limited ; Nusli N Wadia ; Ness N Wadia ; Jehangir N Wadia ; D S Gagrat ; N H Datanwala ; Shailesh Karnik ; R Chandrasekharan ; Durgesh Mehta |
| Techniques | Misleading issuer disclosure |
What was ordered
- Civil penalty
- —
- Disgorgement
- —
- Prejudgment interest
- —
- Total relief
- —
- Alleged gain
- —
- Penalty as published
- 158m INR
What is alleged to have happened
Bombay Dyeing & Manufacturing Company Ltd, part of the Wadia group and listed on BSE and NSE, was investigated by SEBI after complaints, for the financial years 2011-12 to 2018-19. A show cause notice of June 2021 named the company, an unlisted group company, Scal Services Ltd, three members of the Wadia family who were chairman, director and managing director of Bombay Dyeing, and several executives and Scal directors. The final order was made by a whole-time member on 21 October 2022.
SEBI alleged that the company's accounts did not give a true picture because of a series of dealings between Bombay Dyeing and Scal, under memoranda of understanding, in which Scal's real estate business was shown in ways that boosted Bombay Dyeing's reported revenue and profit. The notice charged breaches of section 12A of the SEBI Act and the fraud-prevention rules in the PFUTP Regulations.
The order finds the allegations made out against ten of the noticees under those provisions. It records that revenue and profit were inflated by Rs 2,492.94 crore and Rs 1,302.20 crore for the period 2011-12 to 2017-18, that Scal was a related party of the company for 2014-15 to 2016-17 whose material transactions were not disclosed, and that the managing director breached listing-regulation duties on certifying the financial statements. The notice did not allege that any money was diverted for the promoters' benefit, and the order says investor loss could not be quantified.
The sanctions were two-year market bans on Bombay Dyeing, the three Wadia family members and Durgesh Mehta, a former joint managing director and chief financial officer, and one-year bans on Scal and its four directors, plus one-year bars on the family members and Mr Mehta from director and key management posts in listed companies and registered intermediaries. Penalties were Rs 2.25 crore on the company, Rs 1 crore on Scal, Rs 4 crore on Nusli Wadia, Rs 2 crore on Ness Wadia, Rs 5 crore on Jehangir Wadia, Rs 50 lakh on Mr Mehta and Rs 25 lakh on each of the four Scal directors, Rs 15.75 crore in total.
The record does not show whether the order was appealed or stayed, nor whether the penalties were paid.
This library tags the matter as misleading issuer disclosure. The tagging is ours, not the regulator's.
For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.
What technique is this, and how does it work?
This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.
- Misleading issuer disclosure — see how it works, what statute it engages, and every other action tagged the same way.
Timeline
- 2022-10-21 SEBI order
Primary documents
Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.
Related actions
Other actions in the library sharing at least one technique tag with this one.