SAT Reduces Market Ban on Riddhi Siddhi Gluco Biols, Upholds SEBI Findings on MPS Violation and Fraudulent Trading

The Securities Appellate Tribunal (SAT) has partly modified enforcement orders passed by the Securities and Exchange Board of India (SEBI) against Riddhi Siddhi Gluco Biols Limited, its Chairman and Managing Director Ganpatraj Lalchand Chowdhary, and several connected entities. While affirming SEBI’s findings on violations of securities laws, the Tribunal reduced the duration of the debarment imposed on the company and certain entities for accessing the securities market.

The decision was delivered on March 9, 2026, by a Bench comprising Justice P.S. Dinesh Kumar (Presiding Officer), Meera Swarup (Technical Member) and Dr. Dheeraj Bhatnagar (Technical Member) in a batch of appeals challenging SEBI orders dated July 2, 2021 passed by the Adjudicating Officer and August 11, 2021 passed by the Whole Time Member.

The appeals arose out of regulatory action taken by SEBI in relation to alleged violations of securities laws including the SEBI Act, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, the Securities Contracts (Regulation) Act and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

The dispute traces back to a proposal by Ganpatraj Chowdhary to delist the shares of Riddhi Siddhi Gluco Biols Limited from the Bombay Stock Exchange (BSE). The stock exchange granted in-principle approval for the delisting and the reverse book building process was conducted between March 6 and March 12, 2018, during which a price of ₹630 per share was discovered. However, after complaints from investors, SEBI directed BSE to keep the delisting process on hold and the approval was eventually withdrawn on December 26, 2018.

Following the complaints, SEBI launched an investigation into trading in the company’s shares between December 2016 and March 2018. The regulator found that certain entities including Stuti Trademart Pvt. Ltd., Siwana Agri Marketing Ltd., and Vital Connections Pvt. Ltd. had not been disclosed as promoter group entities. According to SEBI, this non-disclosure led to incorrect reporting of promoter shareholding and resulted in a breach of the statutory requirement that at least 25 percent of the shareholding in a listed company must remain with the public.

Before the tribunal, the appellants argued that these entities belonged to a separate branch of the Chowdhary family under a family arrangement dating back to 1992–93 and therefore could not be treated as part of the promoter group. They contended that the entities had been correctly classified as public shareholders while calculating minimum public shareholding (MPS).

The tribunal rejected this argument, holding that private family arrangements cannot override the statutory definition of “promoter group” under SEBI regulations. The Bench observed that the definition expressly includes immediate relatives such as brothers and sisters and also extends to corporate entities where common shareholding thresholds are met. Applying these provisions, the tribunal concluded that the entities in question were part of the promoter group.

Referring to Rule 19A(2) of the Securities Contracts (Regulation) Rules, 1957, the tribunal held that a listed company must maintain at least 25 percent public shareholding. Based on the shareholding data, the Bench found that promoter shareholding in Riddhi Siddhi had exceeded the permitted threshold during the relevant financial years, resulting in non-compliance with minimum public shareholding norms.

The tribunal also upheld SEBI’s finding that the promoters and several connected entities had traded in the company’s shares in a coordinated manner to create artificial liquidity in what was otherwise an illiquid scrip. The tribunal noted that a large portion of trading volume during the relevant period occurred among connected entities, which supported SEBI’s allegation that the transactions were undertaken to portray the shares as a frequently traded scrip to facilitate the delisting process.

However, while affirming SEBI’s conclusions on violations of minimum public shareholding norms and fraudulent trading, the tribunal considered the issue of proportionality of the penalties imposed. The Bench noted that the delisting proposal ultimately did not materialize and that certain entities had traded in relatively small quantities of shares.

Taking these circumstances into account, the tribunal partly allowed several appeals and reduced the period of debarment. The market access ban imposed on Riddhi Siddhi Gluco Biols Limited, its promoters including Ganpatraj Chowdhary, and certain connected entities such as Creelotex Engineers Pvt. Ltd., Ganpatraj Chowdhary HUF, Mukeshkumar R. Samdaria, Vital Connections Pvt. Ltd., Mohit Bagmar and Sayaridevi Bagmar was reduced to six months. For several other entities involved in the trading activities, the period of debarment was reduced to three months.

Accordingly, the tribunal dismissed Appeal No. 543 of 2021 while partly allowing the remaining appeals by modifying the duration of the market ban imposed by SEBI, without disturbing the regulator’s findings regarding violations of securities laws and minimum public shareholding norms.

Case Details:
Case Title: Riddhi Siddhi Gluco Biols Limited and Ors v. Securities and Exchange Board of India
Case Number: Appeal No. 543 of 2021 and connected appeals
Court: Securities Appellate Tribunal, Mumbai
Coram: Justice P.S. Dinesh Kumar (Presiding Officer), Meera Swarup (Technical Member), Dr. Dheeraj Bhatnagar (Technical Member)
Decision Date: March 9, 2026