Securities Appellate Tribunal Sets Aside SEBI's ₹26 Crore Penalty on Coffee Day Enterprises
The Securities Appellate Tribunal (SAT) has set aside SEBI's order imposing a ₹26 Crore penalty on Coffee Day Enterprises Limited. The penalty was related to alleged fund diversions. SAT's decision follows an appeal by the company, which argued that the founder, V.G. Siddhartha, took sole responsibility for the transactions.
The SET aside of a substantial penalty by the SAT is a major legal and financial victory for the company, impacting its regulatory standing and financial health.
The SAT setting aside SEBI's penalty is a significant positive development for the company, reducing financial and regulatory pressure.
Coffee Day Enterprises Limited (CDEL) has received a significant reprieve as the Securities Appellate Tribunal (SAT), Mumbai, vide its final judgment dated November 5, 2026, set aside the order dated January 24, 2023, passed by SEBI, which had imposed a penalty of ₹26 Crores on the company. The penalty was levied under sections 15HA and 15HB of the SEBI Act, 1992, concerning the alleged diversion of ₹3,535 Crore from seven subsidiaries to Mysore Amalgamated Coffee Estates Limited (MACEL).
The SAT's order disposed of the appeal filed by CDEL (Appeal No. 229 of 2023) in terms of directions contained in Paragraph Nos. 70 and 73 of its judgment. The tribunal's decision effectively nullifies SEBI's earlier order.
The case stemmed from investigations that revealed the diversion of funds, with SEBI alleging that these transfers were made without the necessary approvals from CDEL's Board, Audit Committee, or shareholders. The company, however, argued that the transactions primarily occurred before the amended SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, came into effect, and that the founder, V.G. Siddhartha, had taken sole responsibility for these actions in his suicide note.
While CDEL was exonerated from certain violations related to related party transactions, the SAT's order also noted that CDEL had failed to comply with Regulation 16(1)(c) of the LODR Regulations by not disclosing Coffee Day Trading Limited (CDTL) as a material subsidiary for FY 2019-20, based on its net worth exceeding 10% of the consolidated net worth for FY 2018-19.
Coffee Day Enterprises Limited is currently evaluating the appropriate course of action following the SAT's judgment.
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