SAT Stays Rs 26-Crore SEBI Fine Against Coffee Day Enterprises
SEBI had fined Coffee Day over alleged diversion of Rs 3,535 crore from seven subsidiaries to an entity related to the promoters.
The SAT has stayed a penalty of Rs 26 crore that was imposed by SEBI against Coffee Day Enterprises Ltd. for alleged diversion of funds, the company told exchanges on Monday.
In January, the Securities and Exchange Board of India had fined Coffee Day Enterprises over diversion of Rs 3,535 crore of funds from seven subsidiaries to an entity related to the promoters.
SEBI had noted that funds from Coffee Day units were diverted to Mysore Amalgamated Coffee Estates Ltd., an entity related to the promoters. The seven subsidiaries in question were Coffee Day Global Ltd., Tanglin Retail Reality Developments Pvt., Tanglin Developments Ltd., Giri Vidhyuth (India) Ltd., Coffee Day Hotels and Resorts Pvt., Coffee Day Trading Ltd. and Coffee Day Econ Pvt.
The capital markets watchdog had ordered the company to appoint a law firm—independent of the enterprise's board and under the oversight of the NSE—to recover outstanding dues within 60 days from the order.
In its order on March 3, the Securities Appellate Tribunal said VG Siddhartha, the former chairperson and managing director who committed suicide in July 2019, had mentioned in a note that he was solely responsible for the financial transactions, and the auditors, senior management and members of his family were not aware of them.
"In the light of the aforesaid, we are not inclined to stay the directions issued by the whole-time member," the SAT order read. "We, however, direct that in view of the investigation made by SEBI and the note of Late VG Siddhartha, we stay the imposition of penalty passed by the WTM during the pendency of the appeal."
The stay is subject to the condition that the appellant furnish an undertaking to SEBI that they would deposit the amount, according to the impugned order, within four weeks from the date of the decision of the tribunal if it goes against them, the SAT said.
On Monday, the Coffee Day Enterprises stock closed 1.23% down, against a rise of 0.69% in the Sensex, which closed at 60,224.46.