SEBI bars Gautam Thapar for five years in CG Power fund-routing case

What the Record Shows

By a final order dated 4 October 2022 in the matter of CG Power and Industrial Solutions Ltd, the Securities and Exchange Board of India (SEBI) barred the company's former chairman Gautam Thapar from the securities market for five years and imposed a penalty of Rs 10 crore on him. Across 11 entities, SEBI imposed penalties totalling about Rs 30.15 crore. The former chief financial officer V.R. Venkatesh and two former directors, Madhav Acharya and B. Hariharan, were each restrained for three and a half years and fined Rs 1 crore, while three group entities, Avantha Global, Acton Global and Solaris Industrial Chemicals, were each restrained for five years and fined Rs 5 crore.

SEBI found that CG Power's assets and funds had been routed to the promoter company Avantha Holdings and connected entities, that the company's liabilities had been understated, and that its financial statements for FY2016-17 and FY2017-18 had been misrepresented. The matter had come to light through the company's own board, which disclosed in August 2019 what it described as "major financial lapses and unauthorised advances".

This is a regulatory finding, not a criminal conviction, and it was open to appeal before the Securities Appellate Tribunal (SAT). The current position, set out below, is that on the record reviewed the five-year restraint on Gautam Thapar and the main penalties in the October 2022 order had not been reported as set aside on appeal.

How It Worked

SEBI's case rested on a set of related-party dealings that, on its findings, moved value out of the listed company for the benefit of the promoter group. According to the order, CG Power's assets and funds were transferred to Avantha Holdings, the promoter company, and to a web of connected entities including Avantha International, Acton, Ballarpur International, Mirabelle and Solaris, without the company's knowledge or the approval of its board. SEBI found these transactions were neither conducted at arm's length nor disclosed to shareholders as the rules required.

A second strand concerned the company's accounts. SEBI found that CG Power's liabilities had been understated and the increase not disclosed to the public, and that the financial statements for FY2016-17 and FY2017-18 had been misrepresented as a result. The effect, on SEBI's findings, was that shareholders and the market were given a picture of the company's finances that did not reflect its true obligations.

The sequence began to unravel through the company itself. In August 2019 CG Power's board disclosed the discovery of major financial lapses and unauthorised advances, prompting an internal investigation and SEBI's own inquiry. SEBI passed an interim restraint in September 2019 and issued a show-cause notice dated 21 May 2021, before confirming its findings in the final order of October 2022. That the lapses surfaced through the board's own disclosure is one of the notable features of the matter: the governance failure and its detection came from inside the company.

Who Lost Money

The parties exposed were CG Power's public shareholders and its lenders. CG Power was a substantial listed engineering company, and the routing of its funds to promoter entities, together with the understatement of its liabilities, damaged the value and the credibility of the company that its shareholders owned. Lenders were exposed as the true scale of the company's obligations emerged.

Unusually for a matter of this kind, CG Power itself survived and was later acquired by a new promoter group, which recapitalised the business. That corporate recovery, however, is distinct from the SEBI order: the penalties SEBI imposed are payable to the regulator, not distributed to the shareholders who held the stock through the period of the alleged misstatement, and the market bans remove the named persons from dealing in securities rather than restoring anyone's losses.

Any compensation for shareholders who lost money would depend on separate civil or class proceedings. The SEBI order is a punitive and market-facing measure, aimed at accountability and deterrence rather than restitution.

Where It Stands Now

As of today, SEBI's October 2022 order stands as the operative regulatory finding. It was open to challenge before the Securities Appellate Tribunal, and on the record reviewed the five-year restraint on Gautam Thapar and the main penalties had not been reported as stayed or set aside. Where a party has appealed, the tribunal's decision, rather than the original order, would ultimately govern, so readers should treat the SEBI findings as regulatory determinations that remain subject to the appellate process.

The company's own trajectory diverged from that of its former promoters. After the lapses were disclosed, CG Power was taken over by a new owner and continued as a going concern, which is why the enforcement story and the corporate story point in different directions.

Because these are regulatory findings and not criminal convictions, the individuals named are entitled to pursue their remedies, and nothing in the order amounts to a finding of guilt in a criminal court. The presumption of innocence applies to any separate proceeding.

What It Means

The CG Power matter is often cited as a case where a company's own board surfaced the problem, and it illustrates how India's disclosure regime is meant to work when related-party dealings drain a listed company. SEBI's action targeted both the routing of funds to promoter entities and the misstatement of accounts that concealed it, the two mechanisms by which minority shareholders are most often harmed in promoter-controlled companies.

For an investor, the protective lesson is again about related-party transactions and the quality of disclosure. Large advances or asset transfers to promoter-linked entities, and liabilities that do not appear where they should, are precisely the signals that governance rules require companies to disclose and auditors to test. Those disclosures are public and can be read in a company's own filings.

It is also a reminder that a company and its former promoters can end up on very different paths: CG Power recovered under new ownership even as SEBI pursued its former leadership. SEBI has taken similar action in other promoter-diversion matters, such as the Coffee Day Enterprises orders and the Brightcom Group order. Tools such as Oquilia's lumpsum calculator can help model concentrated-stock risk, and more cases sit in the enforcement archive.

FAQ

Does SEBI's order mean the people named are guilty?

No. A SEBI order is a regulatory finding, not a criminal conviction. The order was open to appeal before the Securities Appellate Tribunal, and the individuals named retain their remedies before the tribunal and the courts. The presumption of innocence applies to any separate criminal proceeding, and a regulatory finding can be challenged.

What did SEBI order?

By its final order dated 4 October 2022, SEBI barred former chairman Gautam Thapar from the securities market for five years and fined him Rs 10 crore, restrained the former CFO and two former directors for three and a half years with Rs 1 crore penalties each, and restrained three group entities for five years with Rs 5 crore penalties each, taking the total to about Rs 30.15 crore across 11 entities.

What did SEBI say happened?

SEBI found that CG Power's assets and funds had been routed to the promoter company Avantha Holdings and connected entities without board approval, that the company's liabilities had been understated, and that its accounts for FY2016-17 and FY2017-18 had been misrepresented, with related-party transactions neither at arm's length nor disclosed.

How did the matter come to light?

It surfaced through CG Power's own board, which in August 2019 disclosed the discovery of major financial lapses and unauthorised advances. That disclosure triggered an internal investigation and SEBI's inquiry, an interim restraint in September 2019, a show-cause notice in May 2021 and the final order in October 2022.

Have shareholders got their money back?

No. SEBI penalties are paid to the regulator, not to investors. CG Power itself was later acquired and recapitalised by a new promoter group, but that corporate recovery is separate from the order, which does not compensate the shareholders who held the stock during the period of the alleged misstatement.

Where can I read the official order?

SEBI's final order dated 4 October 2022 in the matter of CG Power and Industrial Solutions Ltd is published in the enforcement orders section of sebi.gov.in.

This report is based on the final order of SEBI dated 4 October 2022 in the matter of CG Power and Industrial Solutions Ltd, reviewed on 30 July 2026.