The Securities Appellate Tribunal (SAT) has stayed the fine of Rs 26 crore that was levied on Coffee Day Enterprises, the parent of Cafe Coffee Day, by the Securities and Exchange Board of India (SEBI), a regulatory filing said on March 6.
Coffee Day, in its exchange filing, attached a SAT order dated March 3 which noted that the imposition of penalty will remain stayed till the appeal remains pending before the tribunal.
"We stay the imposition of penalty passed by the WTM during the pendency of the appeal subject to the condition that the appellant shall furnish an undertaking to SEBI within four weeks from today to the effect that they would deposit the amount as per the impugned order within four weeks from the date of decision of this tribunal if it goes against them," the order stated.
The tribunal further said that the matter may be "listed for admission and for final disposal on May 2, 2023".
Coffee Day had moved the SAT on January 25, a day after the SEBI issued an order asking the company to pay a penalty of Rs 26 crore, and directing it to appoint a reputed law firm, in consultation with the National Stock Exchange (NSE), to assist with the recovery of outstanding dues of Rs 3,424.25 crore.
The alleged fraudulent diversion and mismanagement of funds within the company amounting to a whopping Rs 3,535 crore first came to light when VG Siddhartha, the chairman of the Coffee Day group, committed suicide in July 2019. He left behind a note addressing the Board of Directors that his team, auditors and senior management were “totally unaware” of all his transactions and that the law should hold only him accountable, as he had withheld the information from everybody, “including his family”.
At the heart of the corporate governance fiasco is the diversion of Rs 3,535 crore from seven subsidiaries of Coffee Day to Mysore Amalgamated Coffee Estates Limited (MACEL), a company that is connected to the coffee chain giant.
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