SAT sets aside Sebi's Rs 4-crore fine on Deccan Chronicle Holdings

The Securities Appellate Tribunal (SAT) on November 9 set aside a Sebi's order that imposed a penalty of Rs 4 crore on Deccan Chronicle Holdings Ltd (DCHL) in a matter related to the alleged misrepresentation of financial statements of the company from FY 2008-09 to 2011-12. In addition, the appellate tribunal reduced the penalty on the company's promoters/directors, T Venkattram Reddy, T Vinayak Ravi Reddy and PK Iyer, from Rs 1.30 crore to Rs 65 lakh each, while affirming some of the Sebi's findings against them.

The order came after the entities approached SAT against the Sebi's order passed in March 2022. "The impugned order in so far as it relates to the company (DCHL) …cannot be sustained and is quashed. The violations committed by noticee nos. 2 (T Venkattram Reddy) 3 (T Vinayak Ravi Reddy) and 4 (PK Iyer) …are affirmed. However, the penalty is reduced from Rs 1.30 crore to Rs 65 lakh each to be paid by the appellants," SAT said in its order.

Sebi, through its order, levied a fine of Rs 4 crore on Deccan Chronicle and Rs 1.3 crore each on T Venkattram Reddy, T Vinayak Ravi Reddy and PK Iyer. In its order, Sebi had found that DCHL underreported the loan amounts, interest payments and financial charges in the books of accounts of the company during the financial year 2008-09 to 2010-11 and thereby misled the investors and shareholders by reporting to the public such manipulated financials of the company and transferred the outstanding loans in the books of Deccan Chronicle Marketers (DCM).

DCHL and its promoters kept the investors in the dark about the increase in their shareholding on account of buyback of shares of the firm, Sebi stated in its order. The market watchdog had noted that the misleading information with respect to its business activities and true nature of its income had the potential to mislead the investors was unfair.