Sterling & Wilson Renewable Energy (S&W) has reportedly accused Embassy Office Parks REIT and WeWork India of not disclosing information.
The dispute is linked to an alleged payment failure of around ₹100 crore.
Sterling & Wilson Renewable Energy (S&W) has accused Embassy Office Parks REIT and WeWork India of not disclosing significant information to investors, the Mint reported, citing a complaint document filed with the Securities and Exchange Board of India (Sebi). The non-disclosure of material information can be considered a breach of Sebi’s regulations, especially if the information can have a significant impact on the company’s securities or investor decisions.
The clash between the two companies is related to the alleged ₹100 crore payment failure.
What’s The Case All About?
The clash stems from a 100-MW solar plant constructed by S&W in Karnataka and is presently operated by Embassy REIT’s unit, Embassy Energy (EEPL). The construction of the plant was given to S&W by IL&FS Energy Development and the latter was supposed to fund the construction. As a part of the arrangement, EEPL would repay IL&FS Energy’s subsidiary IL&FS Solar with interest in equated monthly installments.
IL&FS Energy’s troubled financial health in 2018 resulted in failure of payments worth ₹100 crore to S&W. Consequently, S&W halted the construction work, the Mint reported. However, S&W resumed work after EEPL stepped in and guaranteed payments in case IL&FS Energy failed to do so. The IL&FS Group reportedly became insolvent a year later, and EEPL reportedly failed to make payments. The matter reached the National Company Law Tribunal’s Bengaluru bench, and the court ruled in favour of EEPL. The ruling was later challenged by S&W in the National Company Law Appellate Tribunal, Chennai. The appellate tribunal also ruled in favour of EEPL. S&W has now moved the Supreme Court against the tribunal’s ruling.
In the same case, a complaint resulted in a chargesheet being filed by the Economic Offences Wing against the Embassy Group promoters Jitendra and his son Karan Virmani, who headed WeWork India. S&W has alleged that WeWork India failed to disclose this information when it filed the draft red herring prospectus of its initial public offering earlier this year.
In another complaint filed with the market’s regulator on April 3, S&W argued that the Virmanis should be removed from Embassy REIT due to the ongoing investigation against them. S&W sought promoters' removal under the ‘fit and proper person’ criteria, which lays down requirements for applicants like financial integrity, good reputation, honesty, no conviction in any court for any offence, or any other restraining-related order passed by Sebi.
The Embassy Group, however, has reportedly refuted all repayment failure-related accusations.
