The Competition Commission of India (CCI) has raised concerns about alleged data misrepresented by Muthoot Finance, a leading non-banking financial company’s (NBFC) activities, especially related to its dealings with debenture trustees.
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CCI Questions Muthoot’s Transparency
The show cause notice issued by the CCI on March 14 highlights omissions of material facts by Muthoot in a case related to debenture trustees. These trustees play an important role in protecting the interests of debenture holders, monitoring the performance of the company and taking legal action when necessary.
Previous Complaint and Regulatory Scrutiny
The notice stems from a complaint by Muthoot Finance in September 2021, which alleged that the debenture trustees were taking advantage of their market dominance by charging high fees to facilitate the issuance of non-convertible debentures (NCDs). However, during the CCI investigation, it was revealed that Muthoot had filed a similar complaint with the Securities and Exchange Board of India (SEBI) without disclosing this information to the CCI itself.
Muthoot in Legal Complexity
The issue is emphasized by legal experts according to which the corporate entity has apparently initiated against the complainant, who is familiar as a “whistleblower”; an employee who reports unethical conduct in an organizational context. It creates situations where we can think through the issues of openness and whether the experiments conducted comply with professional measures. Section 45 of the Competition Act empowers the CCI to provide penalties for giving out inaccurate information or/and omission of complete data information.
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Judicial Intervention and Second Show-Cause Notice
This is not the first time Muthoot Finance has faced regulatory scrutiny. A similar notice issued by the CCI was earlier stayed by the Kerala High Court in September 2023. However, following the court’s direction for reconsideration and personal hearing, the CCI has now issued a second show cause notice to Muthoot Finance.
Debenture Trustees’ Challenge
Henceforth, the case has developed into a jurisdictional fight as the trustees are maintaining that the CCI has no legal jurisdiction to resolve the dispute which rather belongs in the purview of the SEBI. The question of which international forum has the authority to make a binding decision on the question of international water rights is a concern. This lack of competency only makes the court proceedings more complicated
