The Securities and Exchange Board of India on Wednesday ordered Indian stock exchanges to verify the fundamentals and credentials of the 331 companies it had classified as shell firms on Monday, reported Business Standard. In a letter to the bourses, the market regulator said that if the business model of any of the 331 companies appeared satisfactory, the trading ban imposed on them could be revoked.

Three of the companies – Prakash Industries, Parsvnath Developers, and J Kumar Infraprojects – have moved the Securities Appellate Tribunal against Sebi’s order. They claimed Sebi’s directives were “arbitrary and unreasonable” and asked for a stay order on the trading restrictions.

Subsequently, the tribunal asked Sebi to explain under which law it had taken action against the 331 firms. “Natural justice should have been followed before action was taken,” the SAT observed.

The market value of at least 10 of these 331 firms is above Rs 200 crore. Of the lot, 161 were active in trading before the ban, with 27 lakh shareholders.