SAT sets aside SEBI's Rs 26 crore penalty on Coffee Day, orders fresh probe
The Securities Appellate Tribunal set aside SEBI's 2023 order against Coffee Day Enterprises over Rs 3,535 crore SEBI says was diverted, and directed SEBI to investigate further within six months.
Key points
- The Securities Appellate Tribunal set aside SEBI's January 2023 order against Coffee Day Enterprises on 5 November 2026, by a majority.
- The order had imposed a Rs 26 crore penalty over Rs 3,535 crore that SEBI said moved from seven subsidiaries to a promoter-linked firm.
- SAT directed SEBI to investigate further within six months, including how public shareholders could be restituted; its order may be appealed to the Supreme Court.
Photo: Wikimedia Commons, CC0 1.0 (cropped). Representational image.
The Securities Appellate Tribunal (SAT) on 5 November 2026, by a majority, set aside a January 2023 order of the Securities and Exchange Board of India (SEBI) that had directed Coffee Day Enterprises Limited (CDEL) to pay a Rs 26 crore penalty and recover dues from a promoter-linked company. The tribunal directed SEBI to carry out a further investigation within six months.
What Happened
According to the order, SEBI's investigation found that Rs 3,535 crore moved between April 2018 and July 2019 from seven CDEL subsidiaries to Mysore Amalgamated Coffee Estates Limited (MACEL), a company controlled by the promoter family, and SEBI alleged the money then went to the group's late chairman, his family and related entities. SEBI's whole-time member had ordered CDEL to take steps to recover the dues and imposed penalties of Rs 25 crore and Rs 1 crore. The order records that only Rs 110.75 crore had been recovered by then.
CDEL argued that the late chairman alone made the transfers and that, at the time, the listing rules did not require its approval for transactions of its subsidiaries. SAT also set aside a separate March 2023 order that had imposed a Rs 1 crore penalty on MACEL.
The majority directed SEBI to investigate the scheme afresh and pass orders in law. SEBI may record statements on oath to trace the ultimate beneficiaries, examine why banks and officials raised no alert on transactions of Rs 3,535 crore, check whether insider trading rules were broken, and consider restituting shareholders, including through disgorgement (an order to give up gains) against the ultimate beneficiaries. The tribunal said SEBI should not be influenced by its observations.
What It Means
For CDEL's shareholders, the penalty and the earlier directions no longer stand, but the matter is not closed: SEBI must investigate again with a view to restituting public shareholders and pass a fresh order. These are SEBI's allegations and no final finding of wrongdoing stands after this ruling. SAT's order may be appealed to the Supreme Court. Investors with complaints against a listed company can use https://scores.sebi.gov.in.
Source: SAT order
Sources & Citations
- SAT order — Securities Appellate Tribunal