Shares of J Kumar Infra Projects on Monday were locked in the lower circuit of 20 per cent after Sebi directed stock exchanges to appoint an independent auditor for a forensic audit of the company’s activities.

The scrip of the company crashed 20 per cent to hit the lowest trading permissible limit of the day at Rs 164.40 on the BSE.

Similar movements were witnessed on the NSE, wherein stocks settled at Rs 162.60 down by 19.98 per cent, which is the lower circuit.

The stock touched a 52-week low on both the exchanges.

The firm had figured among the 331 suspected shell companies.

On Friday, the Securities and Exchange Board of India (Sebi) had passed an interim order directing the bourses to appoint an independent auditor to "further verify misrepresentation including of financial and/or business activities of J Kumar Infra".

The regulator also asked them to look into the role of key management personnel, directors and promoters.

Besides, Sebi said it doubts the authenticity of the documents submitted by J Kumar with regard to PACL.

It has asked the auditor to look into the misuse of the books of accounts, including facilitation and accommodation entries or compromise of minority shareholder interest with respect to its agreement with PACL.

The market regulator has given 30 days to J Kumar Infra to respond to the interim order.

Following the Sebi order, J Kumar Infra in a filing to the exchanges, on Saturday, said it will file its reply/objections on the interim order and will seek personal hearing with the regulator in this matter.

J.Kumar was one of the entities the Sebi had placed in a restricted trade category in August 2017 since it was among the shell companies identified by the ministry of company affairs and the serious fraud investigation office (SFIO). The company had appealed against the order in the Securities Appellate Tribunal, which stayed Sebi’s directions.

Based on the SAT order, Sebi began an investigation into the books of J.Kumar. The regulator sought details of all its contracts, sub-contractors since 2007, employees and nature of their roles. It also sought details of all contracts J.Kumar undertook for PACL, an entity under Sebi investigation.

Sebi in its probe against PACL found that the company mobilised funds worth Rs 49,100 crore till June 15, 2014. It is now undertaking recovery and adjudication proceedings against PACL and its directors.

J.Kumar, in its submissions to Sebi earlier, had said it received Rs 147.17 crore worth contracts between FY09 and FY11 from PACL, which it sub-contracted for Rs 137.72 crore. The profit earned by the company in these three years was Rs 4.45 crore. The market regulator sought books of the company from 2010 onwards on all contracts, including those it received from PACL and Parsvnath Developers, a sub-contractor for J.Kumar.

J.Kumar had argued that Sebi needs do an independent investigation and it can’t rely on SFIO’s opinion and that the probe on the books can’t be done by the regulator as it would be against the principles of natural justice. The company argued that the adverse order against PACL was recent and its dealing with the company dates to FY09-11 when there wasn’t any adverse order against PACL.