Mahindra Satyam case: HC stays Enforcement Directorate order2 min read . Updated: 22 Feb 2013, 11:20 AM IST
Court also stays a notice that asked Mahindra Satyam officials to appear before it with regard to the case
Hyderabad: The Andhra Pradesh high court on Tuesday stayed a provisional order by the Enforcement Directorate (ED) attaching ₹ 822 crore in deposits belonging to Mahindra Satyam in a money laundering case involving Satyam Computer Services Ltd founder B. Ramalinga Raju and others.
Justice P.V. Sanjay Kumar also stayed a notice issued by the adjudicating authority to Mahindra Satyam asking company officials to appear before it with regard to the case.
ED, which investigates foreign exchange violations, had on 18 October, issued a provisional order attaching the company’s fixed deposits of ₹ 822 crore in a money laundering case related to the previous management.
Hyderabad-based Satyam Computer Services fell into a crisis after Raju in January 2009 confessed to having misstated the company’s accounts to the tune of ₹ 7,136 crore over several years. Subsequently, Satyam was purchased by Tech Mahindra Ltd in an auction overseen by government-appointed directors and rebranded Mahindra Satyam.
In a filing to BSE, Mahindra Satyam said the high court had also admitted a writ petition filed by the company related to the order of ED.
“It is a temporary reprieve. It allows you to use your deposits," said Ramesh K. Vaidyanathan, managing partner at Mumbai-based corporate law firm Advaya Legal. “At least from a perception point of view, the stay order indicates there may have been some haste on the part of the ED in attaching Satyam’s deposits."
A Mahindra Satyam spokesperson said the court order would reassure the company’s customers and stakeholders about its ability to “carry on business as usual".
Satyam Computer’s stock rose 2.31% to ₹ 97.55 on Tuesday while the benchmark Sensex declined 0.12% to 19.387.14 points.
Chairman Vineet Nayyar has previously maintained that the amount attached by ED belonged to the company and had not been brought in by Raju during the years that he was chairman.
Nayyar maintained at the announcement of second quarter results in October that the new management never had access to the money brought in by Raju and that the amount had already been spent by the time Tech Mahindra took over the company.
Tech Mahindra and Satyam Computer are due to merge their operations pending approvals by the Andhra Pradesh and Mumbai high courts.
Mahindra Satyam has set aside ₹ 1,230.40 crore under “amounts pending investigation suspense account" in its balance sheet for various cases related to the years before Satyam Computer was bought by Tech Mahindra that are currently being investigated by the Directorate of Enforcement, Central Bureau of Investigation and Serious Fraud Investigation Office (SFIO), Registrar of Companies and other government agencies.
The amount also covers potential liabilities arising from claims by some 37 companies that allegedly gave advances to Satyam Computer during the Raju era.