Embassy Office Parks Real Estate Investment Trust (REIT) has entered another layer of legal complexity following a fresh writ petition filed before the Bombay High Court. Brought forward by petitioner Shashank Garg, the legal challenge seeks judicial scrutiny of regulatory oversight by the Securities and Exchange Board of India (SEBI), governance practices of the REIT’s sponsor and manager, statutory responsibilities of the trustee, and the actions of institutional investors and independent directors associated with the trust. As the court reviews the plea alongside an existing matter, SEBI has informed the bench that it is actively examining the allegations and will submit a comprehensive response via affidavit.
Questions Raised Over SEBI’s ‘Fit and Proper’ Regulations and Compliance
At the core of the new petition is the enforcement of SEBI’s REIT Regulations regarding the “fit and proper person” criteria that entities and individuals associated with a REIT must continuously satisfy. The petitioner alleges that amendments introduced back in 2021 altered the evaluation framework for assessing the ongoing eligibility of persons tied to the sponsor and manager, and claims that these compliance mandates were allegedly not rigorously enforced during the review period. Furthermore, the plea asserts that key disclosures regarding these interpretations were omitted from regular regulatory compliance filings submitted to SEBI and public unitholders.
Scrutiny of Institutional Investors and Board Transitions
The petition extends its corporate governance lens to major institutional investors holding board representation through nominee directors during the questioned timeframe. Specifically, the filing names investment vehicles linked to Kotak Real Estate Fund and Bain Capital, noting that they maintained board representation while holding substantial stakes before later diluting their positions.
The legal challenge also points to the transition of Arvind Kathpalia, who initially served as a nominee director for institutional stakeholders before transitioning into an independent director following shifts in the shareholding structure. The petitioner argues that these structural transitions warrant independent judicial evaluation concerning corporate transparency, disclosure standards, and the fiduciary duties of board members.
Questioning the Statutory Role of the Trustee
Beyond board governance, the petition raises sharp questions regarding the oversight duties of Axis Trustee, which acts as the statutory trustee under existing REIT regulations. The petitioner contends that independent trustees carry a statutory obligation to independently verify regulatory compliance rather than relying solely on information supplied by the REIT manager. Consequently, the plea seeks a thorough judicial examination of the trustee’s approach and diligence during the relevant period under review.
Challenge to SEBI’s April 2026 Regulatory Amendments
Another crucial legal dimension of the petition involves SEBI’s April 2026 amendments concerning the “fit and proper” rule framework, specifically questioning the removal of the chargesheet-based criterion that existed under prior regulations. The petitioner argues that subsequent regulatory modifications cannot retroactively determine the legal standing applicable during periods when older rules were actively in force. As the Bombay High Court prepares to weigh these arguments, SEBI’s upcoming detailed affidavit is expected to set the stage for the next phase of these high-stakes corporate proceedings.