Sebi restrains PFS' acting chairman Mishra from holding director post for 6 months

In its order, markets regulator Sebi found that Pawan Singh had "grossly misused" his position as the MD and CEO of PFS to prevent Ratnesh from joining as Whole Time Director (Finance) and Chief Financial Officer (CFO), which was approved by the company's board. Further, Mishra, who has been PFS' non-executive chairman since November 8, 2021, has found that he was acting as a willing accomplice of Singh, it added.

"The role of Noticee 2 (Mishra) in flouting the norms of corporate governance in this matter is well established," Sebi said.

On Pawan Singh, the regulator said that the MD and CEO in a company, though sitting at a high position within the management hierarchy, is duty-bound to follow the decisions of the company's board and cannot exercise his power unilaterally in an unfettered manner.

"However, in this case, the MD and CEO employed all the tricks to defeat the decision of the PFS Board to appoint Ratnesh, thereby keeping a critical vacancy in the company unfilled," Sebi said in its 111-page order.

Singh made a delayed disclosure of the Forensic Audit Report (FAR) on loans to NSL Nagapatnam Power and Infratech to the board of PFS after two years of completion of the forensic audit. The FAR-2018 was disclosed to the board for the first time in 2020 after two years of its completion.

Also, there was a considerable delay on the part of Singh in providing information in respect of the loan account to the committee of independent directors formed by the board to examine non-disclosure-related issues of the loan account.

Further, even after clear direction from the PFS board to report about the loan account as suspected fraud, there was a significant delay in reporting the matter to RBI, Sebi noted.

In the wake of the receipt of letters of resignation of three independent directors of Ltd -- Santosh B. Nayar, Thomas Mathews and Kamlesh Shivji Vikamsey -- during January 19-21, 2022, which raised several allegations with regard to the corporate governance issues at PFS, Sebi examined the issues raised by them for the period April 2021 to December 2022.

In their resignation letters, these independent directors had raised several allegations of violation of corporate governance norms at PFS.