The Securities Appellate Tribunal (SAT) has sharply criticised the Securities and Exchange Board of India’s (SEBI) investigation into the alleged diversion of Rs 3,535 crore from seven subsidiaries of Coffee Day Enterprises Ltd (CDEL), describing the probe as ‘late’, ‘lacklustre’ and ‘incomplete’. The tribunal has directed the regulator to conduct a fresh, independent and comprehensive investigation within 6 months.
In a majority ruling, Technical Members Dr Dheeraj Bhatnagar and Meera Swarup said SEBI had failed to adequately investigate the alleged siphoning of funds, establish the complete money trail and examine the possible involvement of promoters and other beneficiaries.
Bhatnagar observed that SEBI's investigation was “late, lacklustre, incomplete and largely based on the finding of and confined to, the terms and scope of the CDEL appointed Malhotra committee, which does not serve the objective of investor protection”.
The money was transferred between April 2018 and July 2019 from seven subsidiaries of CDEL to Mysore Amalgamated Coffee Estates Ltd (MACEL), an unlisted company in which 91.75 percent was owned by the father of late Coffee Day founder V.G. Siddhartha.
Subsequent investigations found that Rs 3,088 crore of the transferred amount went to Siddhartha, while Rs 145 crore went to his wife, Malavika Hegde, who is currently CDEL's chief executive officer and managing director.