The Competition Commission of India (CCI) has reportedly issued a showcause notice to Muthoot Finance, alleging that the non-banking financial company (NBFC) misrepresented data.

What Happened: The notice, dated March 14, raises concerns regarding Muthoot’s omission of crucial facts in a case involving debenture trustees, sources told Moneycontrol.

Typically, a trustee protects the interests of debenture holders, oversees performance, ensures security compliance, provides information to debenture holders and initiates legal action in case of company default.

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In September 2021, Muthoot Finance lodged a complaint, alleging that debenture trustees were leveraging their market dominance by imposing excessive fees for facilitating non-convertible debenture (NCD) issuances. However, a CCI investigation revealed that Muthoot had also filed a similar complaint with the Securities and Exchange Board of India (SEBI) without notifying the competition watchdog.

A Tricky Case: Legal experts note the uniqueness of the case, as regulatory action has been initiated against the complainant, termed the “informant” in legal contexts. The CCI can initiate regulatory proceedings if a party provides incomplete or false information.

Legal experts highlight the CCI’s requirement for disclosing parallel proceedings to discourage regulatory forum shopping and lodging complaints on matters under investigation by other regulators.

The case has also reportedly sparked a jurisdictional dispute, with debenture trustees challenging the CCI’s jurisdiction over the matter, arguing it falls under SEBI’s purview. The resolution of this dispute is pending before the Bombay High Court.

Price Action: Muthoot Finance’s share price was holding steady, up 0.86% at ₹1,644.15 in afternoon trade.

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