The Securities Appellate Tribunal (SAT) on Friday refused to grant immediate relief to Suzlon Energy in its challenge against the Securities and Exchange Board of India's (SEBI) Rs 29 crore penalty order. The tribunal adjourned the matter to Aug. 7 and directed SEBI to file its response before the next hearing.
During the hearing, Suzlon sought an unconditional stay on SEBI's order, arguing that the penalty was affecting its relationship with banks and credit rating agencies. However, SEBI opposed the request, stating that the order only imposed a monetary penalty and did not restrict the company from operating or accessing the capital markets.
After hearing both sides, the SAT bench declined to provide interim relief and scheduled the matter for further hearing next month.
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Why Did SEBI Penalise Suzlon?
The case relates to SEBI Whole-Time Member (WTM) Sandip Pradhan's order dated May 29, which found that Suzlon had recognised accounting gains from a series of intra-group transactions that did not reflect genuine commercial value.
According to the regulator, Suzlon transferred its Operations and Maintenance Services (OMS) business to its wholly owned subsidiary Suzlon Global Services Ltd (SGSL) for Rs 2,000 crore, despite the business having a net book value of only about Rs 77 crore. This allowed the company to record an accounting gain of Rs 1,922.92 crore.
SEBI also said that Rs 1,300 crore of the transaction value was not received as fresh money but was settled through repeated movement of funds within the Suzlon group.
The regulator further questioned Suzlon's subsequent transfer of SGSL shares to another subsidiary, Suzlon Structures Ltd, which resulted in an additional accounting gain of Rs 829.78 crore. According to SEBI, these transactions created two layers of profit recognition from the same underlying assets, potentially giving investors a misleading picture of the company's financial performance.
Suzlon Says Transactions Were Fully Disclosed
Suzlon defended its actions before the tribunal, arguing that all transactions involved wholly owned subsidiaries, were legally valid, approved by the board and shareholders, independently valued, and properly disclosed to stock exchanges and investors.
The company also pointed out that an Adjudicating Officer (AO) appointed by SEBI had earlier cleared the company and its executives in June 2025, concluding that the transactions complied with regulatory requirements.
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However, the WTM later took a different view, stating that board approvals, valuations and disclosures alone cannot protect transactions from regulatory action if they create a misleading financial picture for investors.
With SAT refusing to stay the penalty order for now, the matter will next be heard on Aug. 7, when the tribunal will consider SEBI's reply before deciding on Suzlon's request for interim relief.
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