Delphi Printers Ltd., listed on a recognized stock exchange, during the period 2021-22 to 2023-24, issued redeemable preference shares amounting to ₹ 50 crore to some 500 investors. The matter came to the notice of the m

SEBI through its adjudicating officer passed an order against Delphi Printers Ltd imposing a penalty of ₹1 crore for issuing Redeemable Preference Shares to around 500 investors during the period 21-22 to 23-24. An appeal was filed by the Company to the Securities Appellate Tribunal against the orders of the adjudicating officer. In a similar case in Indus Weir Industries Limited (Appellant) vs. SEBI (Respondent) SEBI imposed a penalty of ₹1.00 crore for violation of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013, The Appellant, a Company registered under the Companies Act mobilized funds through issuance of Redeemable Preference Shares ('RPS') during 2010-11 to 2013-14. Admittedly, the appellant collected an amount of ₹33,39,86,230/- from 32,454 investors during this period of 4 years. Since the number of investors from whom money was collected by the appellant through issuance of RPS exceeded 49 in each of the 4 years, the adjudicating officer of SEBI held that the appellant has violated Regulation 4(2) and 16 of the Issue and Listing Regulations, 2013. This act of collecting funds from more than 49 investors is tantamount to a deemed public issue which has been done without following the procedure as stipulated by the regulations for such public issue and listing, and hence the violation. For this violation, the Adjudicating Officer by his order dated January 15, 2018 levied a penalty of Rupees One Crore on the appellant under Section 15HB of SEBI Act. This appeal was challenged by the Company in SAT. While upholding the impugned order on merit, SAT reduced the amount of penalty imposed on the appellant from ₹1 crore to ₹50 lakhs and directed the Appellant to pay the penalty of ₹50 lakhs to SEBI within a period of 4 weeks from the date of the order. In the event, the appellant failed to deposit the penalty within the stipulated period of 4 weeks SEBI was at liberty to recover the amount of ₹50 lakhs along with interest @ 12% p.a. from the date of the impugned order. order of the Adjudicating Officer of SEBI. In the light of the above, it can be concluded that the Order of the SEBI Officer phi against Delphi Printers Ltd can be challenged at SAT and SAT has power to reduce the penalty imposed by the SEBI Officer. The Contention of the adjudicating officer that SAT has no powers to reduce the penalty is not tenable.