SEBI v. Chaturvedi & Shah and K. K. Mankeshwar & Co. (statutory auditors, CG Power, 2023)

Judgment entered

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In April 2023 a SEBI adjudicating officer found that two audit firms breached the anti-fraud (PFUTP) rules through audit reports on CG Power that missed or masked accounting irregularities, and fined each Rs 5,00,000. The order rests on the firms' reports for 2016-17 and 2017-18.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

—

Alleged gain

—

Penalty as published

1m INR

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars. This regulator states penalties in INR. The figure is recorded as published and is not converted, so it does not appear in the USD totals or medians used elsewhere on this site.

What is alleged to have happened

This adjudication order was issued on 20 April 2023 by G. Ramar, an adjudicating officer of SEBI. The two noticees are the audit firms Chaturvedi & Shah, joint statutory auditor of CG Power and Industrial Solutions Ltd for 2016-17, and K. K. Mankeshwar & Co., which took over after Chaturvedi & Shah resigned in April 2018 and audited 2017-18. CG Power is listed on NSE and BSE.

The proceedings grew out of CG Power's August 2019 announcement that its liabilities and advances might have been understated by amounts running to hundreds or thousands of crores of rupees. SEBI restrained the then chairman and others in September 2019, and a later investigation looked at the auditors. SEBI alleged that the firms, instead of acting for shareholders, helped a clean-up of the company's books while aware of irregularities, in breach of section 12A(a), (b) and (c) of the SEBI Act and Regulations 3(b), (c), (d), 4(1) and 4(2)(f) of the PFUTP Regulations, 2003.

The adjudicating officer found the alleged violations established against both firms. The order points to large bank-channel transactions that the auditors could have checked against bank statements and books, to the quick turnaround of the 2017-18 audit report after the new appointment, and to the fact that K. K. Mankeshwar & Co. raised concerns only in its 2018-19 report after the company's own announcement. The officer declined to draw a conclusion from a handwritten note that SEBI relied on against one firm, saying no concrete finding could rest on it.

Each firm was ordered to pay Rs 5,00,000 under section 15HA of the SEBI Act, within 45 days, a total of Rs 10,00,000. The order notes that the material on record did not quantify any gain to the firms or any loss to investors.

The record does not show whether either firm appealed to the Securities Appeals Tribunal, whether the penalty was paid, or any action by the accounting profession's own regulators. This is a SEBI penalty order, not a criminal judgment, and the record describes no criminal case. The order concerns misleading financial reporting by the company and its auditors, not a trading scheme in the shares.

This library tags the matter as misleading issuer disclosure. The tagging is ours, not the regulator's.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Misleading issuer disclosure — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2023-04-20 SEBI order

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEBI order
• Order (PDF)

The linked release is published by the issuing regulator under its own terms. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added October 8, 2026. submit a correction.