SEBI’s quasi-judicial authority (QJA) Santosh Shukla has restrained TTL and seven connected entities for three years, while Mr Choudhary has been restrained for five years. The regulator has also imposed monetary penalties totalling ₹32 lakh, where ₹30 lakh was imposed on Mr Choudhary and ₹2 lakh on Ganesh Gangaram Madhari, a director of one of the connected entities.
The seven connected entities are: Choudhary Global Ltd, Veedhata Towers Pvt Ltd, Lorraine Finance Pvt Ltd, Rohit Steel Lamination Pvt Ltd, Deekay Iron and Steel Pvt Ltd, Kumudini Engineering Pvt Ltd and Ashadeep Multitrade Pvt Ltd.
The order follows an investigation covering the period from April 2018 to March 2023. SEBI had issued a common show-cause notice (SCN) to 19 noticees in June 2025. The allegations included diversion of funds through interest-free loans and advances, fictitious sales and purchases, inflation of trade receivables and financial results, non-disclosure of related-party transactions, questionable Audit Committee disclosures and non-cooperation with the investigation.
₹31.46 Crore Fund Diversion
A key finding concerned the transfer of funds by TTL to entities connected with its promoters. SEBI found that ₹22.48 crore had been transferred to Choudhary Global, Veedhata Towers and Lorraine Finance through interest-free loans or advances. The regulator found these entities non-operational and noted that the amounts were not adequately recovered.
The investigation also uncovered another ₹8.98 crore diversion involving Rohit Steel Lamination. SEBI found that TTL had transferred ₹9.75 crore to the entity but received only ₹0.77 crore. Of the amount transferred, ₹5.51 crore was treated as loans and advances and subsequently written off, while ₹3.47 crore was linked to what SEBI found to be fictitious purchases and sales.
The two components, together, resulted in an alleged fund diversion of ₹31.46 crore, causing a loss to TTL and its shareholders.
SEBI was particularly critical of TTL’s financial position. Revenue from operations declined from ₹11.95 crore in FY18-19 and FY19-20 to ₹1.59 crore in FY20-21, while its net worth fell from ₹39.25 crore in FY18-19 to negative ₹14.46 crore in FY22-23. Despite its weak financial position, the company extended large interest-free loans without adequate security or necessary approvals.
Fictitious Transactions and ‘Paper Companies’
SEBI also examined TTL’s trade receivables, which remained around ₹26 crore to ₹28 crore during FY18-19 to FY21-22. In FY22-23, TTL wrote off trade receivables totalling ₹14.37 crore, with substantial amounts relating to connected entities.
The regulator found that several of these companies had little or no operational presence. For example, the registered premises of Rohit Steel Lamination were found locked, while neighbouring occupants stated that they had not seen the company operating there for years. Its GST (goods and services tax) registration had also been cancelled from August 2022.
SEBI noted that 100% of the sales and purchases of some connected companies were with TTL and its related entities. Transactions were frequently recorded on the same dates and involved negligible margins. In one instance, TTL recorded sales of ₹7.83 crore to Ashadeep Multitrade, representing 53.63% of its FY19-20 sales.
The companies also failed to provide basic supporting documents, including invoices, e-way bills, purchase orders, delivery challans, transport records, bank trails and stock records. SEBI, therefore, concluded that the transactions involving several noticees were fictitious and lacked economic substance.
Financial Statements Misrepresented
According to SEBI, the fictitious transactions enabled TTL to misrepresent its financial position by inflating revenue, trade receivables and net worth. The regulator held that these were not merely accounting irregularities but part of a broader fraudulent scheme that affected investors.
SEBI held that the fund diversion and fictitious transactions violated the SEBI Act and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, while the publication of misleading financial results breached provisions of the Listing Obligations and Disclosure Requirements (LODR) Regulations.
The regulator also rejected the argument that persons who did not directly trade in TTL shares could not be held responsible for securities-market fraud. It held that fraudulent conduct relating to the affairs of a listed company can attract the PFUTP framework even where the person responsible did not personally buy or sell the company’s shares.
SEBI further noted that TTL’s shareholder base increased after trading resumed following a suspension between March 2020 and February 2021, while its share price subsequently rose sharply, touching ₹7.86 on 19 January 2022.
Corporate Governance Failures
The order also highlights serious failures in related-party disclosures. TTL failed to identify several connected entities as related parties and did not disclose transactions with them for the relevant financial years. SEBI noted that prior audit committee approval was mandatory for such transactions.
The regulator also found discrepancies concerning board and audit committee meetings. Several directors stated during the investigation that they had not actually attended the meetings or were unclear whether they were Board or Audit Committee meetings. One independent director said documents were sent to her for signature and that she had never visited TTL’s office. Another said he attended meetings only briefly to sign the minutes.
SEBI Terms Mr Choudhary as ‘Mastermind’
SEBI placed particular responsibility on Mr Choudhary, describing him as the ‘mastermind’ behind the plans and acts. The regulator found that he exercised control, directly and indirectly, through promoter-group entities and family members, and used connected entities as vehicles for the transactions.
The regulator also found that certain persons occupying senior positions had little actual authority, describing the managing director and chief financial officer as namesake or figurehead executives. SEBI emphasised that liability should be determined by the actual role played by an individual rather than merely by the designation held.
₹32 Lakh Penalty; No Disgorgement
SEBI imposed a ₹30 lakh penalty on Mr Choudhary for violations of the PFUTP Regulations. Mr Madhari was separately fined ₹2 lakh for failing to appear before the investigating authority.
SEBI did not impose monetary penalties on TTL or the other connected entities, citing TTL’s negative net worth and the non-operational status of the other entities. Instead, it considered the market-access restraint proportionate.
