SEBI Imposes ₹5 Lakh Penalty On Former Blue Coast Hotels CFO For Financial Disclosure Lapses

The Securities and Exchange Board of India (SEBI) on 11 March imposed a penalty of Rs. 5 lakh on Amit Kumar Singhl, former Chief Financial Officer of Blue Coast Hotels Limited, for certifying financial statements that allegedly failed to disclose key liabilities and related party transactions in violation of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Adjudicating Officer Jai Sebastian passed the order, observing:

“The role of the Noticee in the established violations indicate a fundamental breakdown in governance, compliance, and oversight responsibilities critical to maintaining financial integrity and protecting investor interests. Noticee, in his executive role, endorsed inaccurate financial statements and provided false certifications, thus misled the board, undermining accountability. The aforementioned factors have been taken into consideration while adjudging the penalty.”

SEBI initiated adjudication proceedings after an NSE examination report flagged irregularities in the financial statements of Blue Coast Hotels Ltd for FY19–FY22.

One of the main allegations related to the Delhi Aerocity Project undertaken by the company through a special purpose vehicle, Silver Resort Hotel India Pvt Ltd (SRHIPL). Blue Coast Infrastructure Development Private Limited (BCIDPL) and SRHIPL entered into a joint development agreement for the same.

The project failed after SRHIPL defaulted on payment obligations to Delhi International Airport Limited, which took possession of the project in 2015. Space buyers subsequently filed a suit seeking refund of their investment, and the Delhi High Court in 2018 directed the defendants, including the company, to refund Rs. 318.95 crore.

SEBI alleged that despite this direction, the company did not recognise the refund liability as a contingent liability in its financial statements for FY19–FY22, as required under accounting standards.

It was further alleged that the company recorded the Delhi hotel project loss of Rs. 8.82 crore as “miscellaneous expenses” instead of “exceptional items” in its financials, and treated Rs. 2.49 crore paid to SRHIPL as an advance rather than a loan, thereby failing to present a true and fair view of its financial position.

SEBI also alleged failure to disclose and obtain approvals for certain material related party transactions, while CFO Amit Kumar Singhl had issued compliance certificates to the Board of Directors stating that the financial statements were compliant with applicable laws and accounting standards.

SEBI had issued a show cause notice to him; however, he did not file any reply or avail the opportunity of a personal hearing, following which the matter proceeded ex parte.

The regulator observed that before the Delhi High Court, the company had agreed that the liability to pay back the space buyers would fall on the company if BCIDPL and SRHIPL failed to fulfill their obligation to pay. It observed:

“The liability of the Company to refund the space buyers was contingent upon performance or non-performance of BCIDPL and SRHIPL to make such refund. Thus, the refund liability to the space buyers was a contingent liability for the Company and accordingly, the Company should have recorded the said liability as contingent liability in FY19 to FY22.”

SEBI held that the company's classification of the Rs. 8.82 crore Delhi project loss as “miscellaneous expenses” and recording Rs. 2.49 crore paid to SRHIPL as advance, was not in line with Indian Accounting Standards.

Accordingly, SEBI held that the CFO had failed to ensure compliance with the disclosure and accounting standards under the LODR Regulations and imposed a penalty of Rs. 5 lakh.