Show Cause Notice issued to Muthoot Finance for regulatory shopping by CCI
The Competition Commission of India (CCI) has issued a Show Cause Notice (SCN) to Muthoot Finance which is a non-banking financial company for alleged misrepresentation of data, as per per the sources.
Muthoot Finance questioned in the notice for failure to disclose the key facts of the matter involving debenture trustees.
Basically, a trustee’s role includes monitoring the company’s performance, enforcing security, providing information to debenture holders and safeguarding the interests of debenture holders. Trustees are also in charge of taking legal action in case of default by the company.
Muthoot Finance filed a complaint in September 2021 alleging the trustees were misusing their dominance in the market by charging outrageous fees to facilitate the issuance of non-convertible debentures.
After the investigation by CCI, it was found out that without informing the competition watchdog, the company had filed a similar lawsuit with SEBI.
It is a rare case as regulatory action has already been taken against the complainant which is often known as the “informant”, legal experts say.
