Sterling and Wilson urges SEBI Action, Embassy REIT rejects allegations as frivolous

NEW DELHI: Sterling and Wilson Renewable Energy Limited (SWREL) has urged the Securities and Exchange Board of India (SEBI) to act against Embassy Office Parks REIT over alleged regulatory violations, citing criminal charges against individuals linked to the REIT’s management.

However, Embassy REIT in its disclosures, has dismissed the accusations as “false, frivolous and vexatious,” asserting that the matter has already been rejected by multiple judicial forums and it has been held that there exists no binding contract between Embassy Energy and Sterling Wilson.

In a letter dated September 5, Sterling and Wilson reiterated that the case involves chargesheets filed by the Economic Offences Wing and Enforcement Directorate for alleged offences of cheating, criminal breach of trust, and money laundering.

The company stressed that such proceedings directly impact the “fit and proper person” criteria under SEBI regulations.

Jagannadha Rao, Company Secretary and Compliance Officer of SWREL, said: “Key personnel associated with Embassy REIT are facing a chargesheet for serious economic offences, directly implicating the ‘fit and proper’ criteria under SEBI regulations. This situation demands regulatory intervention to protect the interests of the market and all investors.”

Sterling and Wilson also rejected the argument that it lacked locus standi, emphasising that SEBI’s mandate covers the integrity of the entire market.

Embassy REIT disclosures state that the alleged non-payment of ₹100 crores by Embassy Energy is “baseless” and part of a “pattern of vexatious litigation” pursued by Sterling Wilson. It is also stated that the dispute stems from a 2017 contractual arrangement between Embassy Energy and an IL&FS entity. Sterling Wilson was a sub-contractor engaged by another sub-contractor (another IL&FS entity) with no direct contract or agreement with Embassy Energy.

Given the financial difficulties faced by the IL&FS group in 2018, Sterling Wilson claimed that certain payments were not forthcoming, and they demanded the same of Embassy Energy.

Embassy Energy has discharged all its obligations, making a payment of ₹777 crores in December 2020 to IL&FS Solar. Despite this, Sterling Wilson has continued its frivolous litigation against Embassy Energy at the same time seeking payment from the IL&FS sub-contractor. The disclosure also states that Sterling Wilson’s claim to the extent of approximately ₹94 crores has been accepted in the IL&FS insolvency proceedings.

The REIT pointed out that both the National Company Law Tribunal (Bengaluru) and the National Company Law Appellate Tribunal (Chennai) have dismissed the claims, ruling that no contractual relationship existed between EEPL and Sterling Wilson Private Limited (SWPL).

Embassy REIT also stated that SWREL has initiated criminal proceedings against individuals not responsible for EEPL’s operations. It clarified that Jitendra Virwani has never been a director of EEPL, and Karan Virwani resigned as a director in 2019. (ANI)