SEBI settles India Power Corporation disclosure case for Rs 24.7 lakh

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has settled adjudication proceedings against Mr Raghav Raj Kanoria, the managing director of India Power Corporation Limited (IPCL), on payment of Rs 24,70,000. The settlement order, numbered SO/JS/VC/2026-27/8620 and signed by Adjudicating Officer Jai Sebastian at Mumbai, was passed on 3 August 2026 and published on the SEBI enforcement portal dated 5 August 2026.

The order disposes of proceedings that SEBI had initiated over alleged misstatement of IPCL's financial statements for the financial years 2022-23 and 2023-24. Under the settlement, Mr Kanoria resolved the matter "without admitting or denying the findings", the standard formulation the SEBI (Settlement Proceedings) Regulations, 2018 permit. No finding of violation has therefore been recorded against him, and the allegations in SEBI's show cause notice were never adjudicated on merits.

The settlement traces to a SEBI investigation into IPCL, a listed power utility, followed by adjudication proceedings begun under rule 4(1) of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 read with section 15-I of the SEBI Act, 1992. A show cause notice bearing reference SEBI/HO/EAD-2/JS/VC/14191/1-4/2025, dated 28 May 2025, was issued to Mr Kanoria in his capacity as managing director. He applied to settle on 21 July 2025, and SEBI has confirmed receipt of the settlement amount, remitted on 17 June 2026.

How the Scheme Worked

According to the show cause notice as summarised in the order, SEBI's concern centred on how IPCL accounted for two categories of receivables in its books for FY 2022-23 and FY 2023-24. The regulator alleged that the company misstated its financial statements by not recognising Expected Credit Losses (ECL), the provisioning that Indian Accounting Standard (Ind AS) 109 requires against amounts a company may not fully recover.

The first limb concerned receivables from an entity the order describes as Power Trust, amounting to Rs 199.70 crore, on which, the notice alleged, no expected credit loss was recognised. The second limb concerned unsecured loans, including accrued interest, of Rs 37.53 crore, on which, again, the notice alleged the required credit-loss provisioning was not made. Taken together, the two limbs relate to more than Rs 237 crore of receivables whose recoverability, per the notice, was not reflected through provisioning in the accounts.

The significance of an Expected Credit Loss provision is that it reduces reported profit and the carrying value of the asset to reflect the risk that the money will not come back. The allegation, as framed, was that by not booking those provisions the financial statements presented a more favourable picture than the accounting standard contemplates. SEBI issued the notice to Mr Kanoria as managing director, invoking the principle that persons in charge of a company can be held answerable for the company's disclosures.

The procedural history set out in the order is straightforward. The investigation led to adjudication proceedings; the adjudicating officer was appointed by a SEBI communique dated 17 April 2025; the show cause notice followed on 28 May 2025. Rather than contest the notice to a finding, Mr Kanoria filed a settlement application on 21 July 2025. He met SEBI's Internal Committee on 22 January 2026 and, by letter dated 10 February 2026, proposed revised settlement terms.

SEBI's High Powered Advisory Committee (HPAC) recommended settlement on payment of Rs 24,70,000 at its meeting on 25 March 2026, and the Panel of Whole Time Members accepted that recommendation on 13 May 2026. A demand notice went out on 20 May 2026 and the amount was paid on 17 June 2026, after which the proceedings were disposed of.

The Law Invoked

The proceedings and the settlement rest on provisions the order itself cites. The adjudication was launched under section 15-I of the SEBI Act, 1992, which empowers an adjudicating officer to hold an inquiry and impose penalties, read with rule 4(1) of the 1995 Inquiry Rules. The specific penalty provision engaged was section 15HB, the residuary section under which a penalty may be imposed for a contravention where no separate penalty is otherwise provided.

The substantive allegations were framed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The order lists regulation 4(1) clauses (a) to (j) and 4(2)(e)(i), which set out the principles governing a listed entity's disclosures; regulation 33(1)(a) and (c), which deal with the preparation and content of financial results; and regulation 48, which requires compliance with applicable accounting standards, here read with Ind AS 109. Provisions of regulation 4(2)(f), covering the responsibilities of the board and management, were also cited, along with section 27 of the SEBI Act, which addresses contraventions by companies and the answerability of persons in charge.

The settlement itself was effected under section 15JB of the SEBI Act, which allows administrative and civil proceedings to be settled, read with the SEBI (Settlement Proceedings) Regulations, 2018. Regulation 23(1) provides for disposal on settlement, while regulation 28 preserves SEBI's right to revive proceedings if any representation made during settlement is later found untrue or a settlement condition is breached.

What Happens Next

For Mr Kanoria the matter is, for now, closed. A settlement order under section 15JB disposes of the specific adjudication proceedings named in it. There is no penalty adjudicated and no bar imposed; the amount paid is a settlement charge, not a fine following a finding of guilt.

The order is not, however, unconditional. Under regulation 28 of the Settlement Regulations, SEBI expressly retains the right to restore or initiate proceedings if any representation Mr Kanoria made in the settlement process is subsequently found to be untrue, or if he breaches any clause, condition, undertaking or waiver filed during the settlement. In that limited sense the disposal is contingent on the good faith of the disclosures made to obtain it.

Settlement also leaves other tracks untouched. A settlement of adjudication proceedings against one individual does not, by itself, conclude any separate action SEBI may consider against the company or other officers, nor does it speak to the correctness of the accounts as a matter of company law. Because the case was settled without a finding, there is no SEBI order on the merits for either side to appeal to the Securities Appellate Tribunal.

What It Means

For ordinary investors the takeaway is less about one company than about a category of risk: how a listed company provisions for money it is owed. Expected Credit Loss accounting exists precisely so that receivables which may not be recovered are not carried at full value, flattering profit and net worth. When a regulator questions whether such provisions were made, the concern is that reported numbers may overstate financial health.

Investors cannot audit a balance sheet themselves, but they can read the signals. Auditor notes, qualifications and emphasis-of-matter paragraphs, related-party disclosures, and the size of receivables from a single counterparty relative to net worth are all visible in annual reports and worth scrutiny. Where a large share of a company's receivables sits with one connected entity, the recoverability of that sum matters to the reliability of the whole statement.

It is also worth understanding what a settlement is and is not. It is a regulatory resolution that saves time and cost on both sides; it is not a verdict, and here it carries no admission. Reading the settlement figure of Rs 24.7 lakh as a measure of wrongdoing would be a mistake, because no wrongdoing was established. The durable lesson for a reader is to treat provisioning and receivables disclosures as central to assessing a company, not as accounting footnotes.

FAQ

Has SEBI found India Power Corporation or its MD to have violated any rule?

No. Mr Raghav Raj Kanoria settled the proceedings "without admitting or denying" SEBI's allegations, which the SEBI (Settlement Proceedings) Regulations, 2018 expressly allow. No finding of violation was recorded, and the show cause notice allegations were never adjudicated on merits. A settlement disposes of proceedings; it is not a determination of guilt.

What exactly did SEBI allege?

Per the show cause notice summarised in the order, SEBI alleged that IPCL misstated its financial statements for FY 2022-23 and FY 2023-24 by not recognising Expected Credit Losses on receivables from Power Trust of Rs 199.70 crore, and on unsecured loans including accrued interest of Rs 37.53 crore, as required under Ind AS 109 and the LODR Regulations.

How much was paid, and is it a fine?

The settlement amount was Rs 24,70,000, recommended by SEBI's High Powered Advisory Committee and accepted by the Panel of Whole Time Members. It is a settlement charge paid to dispose of the proceedings, not a penalty imposed after a finding of contravention.

Can SEBI reopen the matter?

Yes, in limited circumstances. Under regulation 28 of the Settlement Regulations, SEBI may restore or initiate proceedings if any representation made during settlement is later found to be untrue, or if a settlement condition or undertaking is breached.

How can I check a listed company's disclosure record?

Listed companies file financial results, annual reports and disclosures with the stock exchanges (BSE and NSE) and SEBI. SEBI's website publishes enforcement and settlement orders under its Enforcement section, where investors can read the primary documents for themselves.

Where can I read the official order?

The settlement order is published on SEBI's website in its enforcement orders section for August 2026, as Settlement Order No. SO/JS/VC/2026-27/8620.

This report is based on the official SEBI settlement order dated 5 August 2026 in the matter of India Power Corporation Limited, published on SEBI's enforcement portal. It was surfaced directly from SEBI's enforcement feed.