In the first ever exercise of Sebi's powers to order arrest of a defaulter, former promoter of Pyramid Saimira P S Saminathan was detained for failing to pay over Rs 1 crore dues, but was released later on health grounds and after furnishing sureties for the required payments.
Securities and Exchange Board of India (Sebi) had detained Saminathan today in its Chennai office and had asked him to come out with detailed proposal for payment of dues, failing which he would be arrested and sent to a civil prison.
The market watchdog in October last year, had directed Saminathan to pay the penalty of Rs 1.27 crore imposed on him for his involvement in case related to fraudulent trading activities of Pyramid Saimira Theatre. Besides the penalty, Saminathan also has to pay an interest and other charges.
As Saminathan had failed to repay the dues within the stipulated time, Sebi had earlier this month summoned him to appear before its recovery officer.
During the proceedings against him today, Saminathan was advised by Sebi to pay substantial portion of the dues failing which he would be arrested and detained in civil prison.
After a few hours, Saminathan had informed the market regulator that he would make a payment of Rs 50 lakh to Sebi by June 3 and would pay the remaining balance within six months in equal monthly instalments.
Besides, he informed Sebi that he had been undergoing dialysis treatment once in every 2-3 days at a Chennai hospital and was scheduled for one the same evening.
Saminathan made representation to Sebi that he would need to borrow money from people to pay the dues.
Sebi said Saminathan has shown "his commitment towards payment of the dues" and furnished a demand draft for Rs 6.50 lakh.
"...and the fact the defaulter is undergoing dialysis treatment at Cauvery Hospital, Chennai and has been suffering from some ailments which is noted from the documents made available on record...it is ordered to release the defaulter upon his undertaking to pay Rs 50 lakh towards the said dues to Sebi on or before June 3, 2014 and the remaining balance within six months in equal monthly instalments and also furnishing two sureties of responsible persons," it added.
Accordingly, Sebi in an order said "the defaulter has furnished an undertaking to pay the entire dues... furnished two sureties and executed bonds for the entire dues, based on which the defaulter has been released".
In March, the president of India had re-promulgated the ordinance for the third time that provides Sebi with powers to detain and arrest defaulters, among others.
The long drawn case has seen Sebi penalising Saminathan for multiple violations, including non-compliance with disclosure norms and for indulging in fraudulent trading activities.