VLS has challenged the downgradation of four notches in one shot from FAA (-) to FB (+) on the ground that there are no statutory guidelines or regulations prescribed as yet by Sebi under section 11 (2ba) of Sebi Act, 1992.

The company has contended that the downgradation in the absence of statutory guidelines for the rating of non banking financial companies (NBFCs) by credit rating agencies is leaving a large sector of NBFCs at the whims and mercy of these agencies.

VLS has demanded a huge compensation from Crisil for its downgradation without "observance to norms, fairplay and taking into account the company's corporate and financial strengths and for releasing to the media the news of downgradation without informing the company."

The counselfor VLS contended in the court that under section 11 (2ba) of Sebi Act, the Sebi board is mandated to regulate by rules and reglations the functions and working of all the credit rating agnecies in the country so that these agencies do not act arbitrarily while rating the credit worthiness of companies and their debt instruments.