Sebi sanction: SAT reduces Sebi sanctions on NDTV, promoters in loan deal case


The Securities Appeals Tribunal (SAT) has reduced the penalties imposed on Sebi and its promoters Prannoy Roy, Radhika Roy and RRPR Holding to Rs 5 crore from Rs 25 crore in a case related to the non-disclosure of an agreement loan. In addition, the Appeal Tribunal reduced the fine imposed on NDTV to Rs 10 lakh from Rs 5 crore over its failure to disclose the loan agreements with Vishvapradhan Commercial Pvt Ltd (VCPL).

The appeals court upheld Sebi’s finding of breach of the listing agreement, but reduced the amount of the penalty, saying it was “excessive.”

Additionally, SAT rescinded a Sebi order passed in June 2018 that ordered VCPL to make an open offer to NDTV shareholders.

“Reading the agreement, the call option agreements, the option to convert the warrants and the call option together does not in any way lead to the conclusion that VCPL is acquiring indirect control over NDTV. Thus, the instruction given to VCPL to make an open offer in terms of…SAST regulations…does not arise,” the SAT said in its 91-page order passed Wednesday.

The latest decision comes after eight appeals were filed against four Sebi orders passed from June 2018 to December 2020.

In June 2018, the regulator ordered VCPL to make an open offer. In June 2019, Sebi barred Prannoy Roy (PR), Radhika Roy (RR) and RRPR from entering the securities market for a period of two years and further prohibited Roys from holding or holding any office directors or key management personnel in NDTV for a period of two years or in any other listed company for a period of one year.

RRPR Holding is a promoter of


On December 24, 2020, the regulator had imposed fines totaling Rs 25 crore on Roys and RRPR Holding. Also, a penalty of Rs 1 crore each was imposed on the couple. Again on December 29, 2020, the regulator imposed a fine of Rs 5 crore on NDTV.

The investigation into the matter began in 2017 after Sebi received complaints from Quantum Securities Private Limited – a shareholder of NDTV – of an alleged violation of the rules by the non-disclosure of material information to shareholders of NDTV regarding the loan agreements with VCPL.

In the investigation, it was revealed that PR, RR and RRPR did not disclose the loan agreement with

and the loan agreement with VCPL, to the company, stock exchanges and shareholders.

One NDTV loan deal was with ICICI Bank, and two deals with VCPL. An agreement was signed in 2009 with VCPL for a loan of Rs 350 crore to repay the ICICI Bank loan and a second loan agreement with VCPL was signed for Rs 53.85 crore a year later.

In addition, one of the terms of the loan agreements allowed VCPL to indirectly acquire a 30% interest in NDTV through the conversion of warrants into shares of RRPR Holding.

In its order, SAT noted that the appellants were required to disclose the loan agreement under clause 49 of the listing agreement, particularly when PR and RR were president and CEO of NDTV, respectively.

She noted that the loan agreement in no way transferred control of NDTV to VCPL, either directly or indirectly.

“The finding that the concealment of the loan agreement which gave de facto control to VCPL was concealed from the shareholders and therefore such an arrangement deployed by the Appellants to transfer their substantial stake in NDTV was fraudulent and violated the …. the PFUTP settlement also cannot survive since we have already ruled that there was no direct or indirect control over NDTV by VCPL,” the court said.

According to the appeals tribunal, with respect to the violation of the code of conduct, Sebi’s order preventing them from entering the securities market or accepting any directorship is completely out of context and is not not commensurate with the alleged breach, especially when no fraud has been committed and the loan agreement does not mislead the investors.

Further, he said the imposition of a penalty of Rs 25 crore by Sebi was also “high, excessive and disproportionate” to the alleged violation and therefore reduced the amount to Rs 5 crore.

In addition, the instructions given by the Sebi being excessive have been set aside.

SAT said that NDTV, by not disclosing the minutes of the meeting, dated August 5, 2015, relating to the loan agreement signed by RRPR with VCPL, to the exchanges violated article 36 of the agreement of ‘registration.

While upholding Sebi’s order only with respect to the breach of clause 36 of the listing agreement, SAT found that the fine of Rs 5 crore on NDTV is excessive and therefore reduced the amount of the fine. fine at Rs 10 lakh.

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