Shares of Vedanta Ltd were on the decline on Wednesday after the markets regulator ordered Vedanta India to pay out Cairn UK for delayed dividend payments.

What Happened: The Securities and Exchange Board of India (SEBI) has directed Vedanta India, formerly known as Cairn India Ltd, to remit ₹77.62 crore plus an 18% per annum simple interest to Cairn UK Holdings for delayed dividend payment.

Moreover, SEBI has instructed the company’s Chairman and Managing Director Navin Agarwal, whole-time director Tarun Jain, Whole-time Director and CEO Thomas Albanese, and Whole-time Director and CFO GR Arun Kumar to abstain from accessing the securities market for two months. Non-executive directors have also been barred from market access for one month.

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In April 2017, Cairn UK lodged a complaint with SEBI alleging Cairn India Limited’s (merged with Vedanta on April 11, 2017) non-payment of dividends amounting to ₹340.64 crore. Cairn India had contended that all outstanding unpaid dividends had been remitted to the Income Tax Department against recovery notices.

Cairn UK appealed to the Securities Appellate Tribunal (SAT), which instructed SEBI to reconsider the complaint. While SAT agreed partially with SEBI’s ruling, it also directed CUHL to approach the income-tax authorities for dividend repayment. If Cairn India (now Vedanta India) failed to disburse dividends when there was no embargo, SAT recommended that SEBI investigate and take appropriate action for any violation.

Cairn India argued that since it had not benefited from the unpaid dividends and had transferred the total dividend amount to an account, it should not be penalised with interest levies. However, SEBI emphasised that interest serves to compensate for the time value of money and reflect the loss incurred by the claimant due to wrongful deprivation.

Price Action: Vedanta Ltd’s share price was down 1.55% at ₹266.10 near the start of trade on Wednesday.

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