Coffee Day Enterprises asked to pay Rs 26 crore fine
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Coffee Day Enterprises was fined Rs 26 crore by the Securities and Exchange Board of India (SEBI). The markets watchdog is imposing a fine over failing to recover dues from a sister concern.
The fine has to be paid in 45 days.
The fraudulent diversion and mismanagement of funds within the company were exposed when VG Siddhartha, the chairman of the Coffee Day group, committed suicide in July 2019. His note said his team, auditors, and senior management were totally unaware of his transactions.
SEBI also asked the company to recover Rs 35.35 billion from Mysore Amalgamated Coffee Estates Ltd and other connected entities. It added that these funds were diverted from the company and its seven subsidiaries causing losses to the shareholders.
Whole Time Member Ashwani Bhatia imposed a penalty of Rs 25 crore under section 15HA dealing with fraudulent and unfair trade practices relating to securities and Rs 1 crore under section 15HB of the SEBI Act, 1992 dealing with provisions for the imposition of penalties.
The WTM has also directed that CDEL, in consultation with NSE, should appoint a reputed law firm to take effective steps for the recovery of dues. The law firm also needs to file a quarterly report with the NSE and CDEL board detailing the progress in the recovery proceedings.
"At this pace of recovery, there is no real possibility of the subsidiaries recovering money even in perpetuity. This also shows a lack of interest on part of CDEL and its subsidiaries to recover the outstanding dues. The company’s submissions that it has started the process of recovery of the outstanding amount from MACEL cannot be given credence. Further, the outstanding dues are the principal amount. If interest, at a reasonable rate, is applied and considered, the liability would be much higher," said WTM in his order.
