PTC CMD, former PFS MD barred from boards, managements of listed companies

New Delhi: The Securities and Exchange Board of India (Sebi) has barred the CMD of PTC India Ltd, formerly Power Trading Corporation, Rajib Kumar Mishra and the former MD of its subsidiary PTC India Financial Services (PFS), Pawan Singh from holding any position on the board or management of a listed company for a period of six months and two years respectively over alleged corporate misgovernance in PFS.

The market regulator has also imposed penalties of ₹10 lakh and ₹25 lakh respectively on Mishra and Singh.

The order concerns Ratnesh Kumar, who was Chief General Manager at NTPC before joining PFS as Director Finance. However, he went back to NTPC after his appointment was stalled by Singh.

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NTPC is a promoter company of PTC with around 4% stake.

The order

In its order on Wedneday, it said that both Mishra and Singh are "restrained from holding any position of director or key managerial personnel in any listed company or any intermediary registered with Sebi, or associating himself with any listed public company or a public company which intends to raise money from the public or any intermediary registered with Sebi, in any capacity".

The market regulator said its investigation has found that Singh had "grossly misused his position as the MD and CEO of PFS to prevent Mr. Ratnesh from joining as WTD (whole time director) (Finance) and CFO, which was approved by the Board of PFS". It noted that the MD-CEO in a company, though sitting at a high position within the management hierarchy, is duty-bound to follow the decisions of the board and cannot exercise his power unilaterally in an unfettered manner.

"However, in this case, the MD & CEO employed all the tricks to defeat the decision of PFS Board to appoint Mr. Ratnesh, thereby keeping a critical vacancy in the company unfilled." The board had approved the appointment in its meeting on 28 August, 2021.

Alleged lapses of corporate governance also included delays in disclosure of a forensic audit report (FAR) by Pawan Singh on loans to Nagapatnam Power and lnfratech Pvt Ltd to the board of PFS two years after the audit had been completed.

"The fact that Noticee 1 (Singh) did not disclose to the Board for two years the FAR-2018 (pertaining to loan account of NSL) and delayed the supply of information to CoID and implementing the decision of the Board of PFS to inform the matter as a case of suspected fraud further shows that Noticee 1 was running the Company as a private concern where his writ ran large, even if it was to the detriment of the Company."

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Responding to queries from Mint, Singh said: "I was the one who volunteered for forensic audit. I have stuck to sound principles of corporate governance. Justice and law will prevail."

On Mishra, the order said that he was acting as a "willing accomplice" of Singh.

The order noted that Mishra, being the chairman of PFS, had all the authority to set things right by looking into the issues raised by the independent directors.

Although Mishra was duty-bound to ensure that the independent directors were able to function independently in a conducive environment while at the same time ensuring that the board decisions were effectively implemented, he looked the other way while Singh ran the company as per his wishes, the market regulator said in it is order.

The instances of misgovernance came to light when three independent directors resigned from the board of PFS flagging concerns over corporate governance issues in January, 2022.

Showcause notices were sent to both Mishra and Singh in May last year and in June 2023 year Singh was sent on leave till his superannuation in October 2023.

"The said acts of disregarding regulators’ directions reflected poorly on the conduct of Noticees 1 (Singh) and 2 (Mishra), as Board members of PFS," the order said.

Queries sent to PTC India, Rajib Mishra and PFS remained unanswered at press time.