Supreme Court refuses to stay SAT relief for Bombay Dyeing, Wadias

A Bench of Justices BV Nagarathna and R Mahadevan, however, said that the SAT's 2:1 split verdict would not be treated as a precedent in similar matters before the tribunal. "Since the impugned order is a split verdict, 2:1, we observe that the same shall not be a precedent in similar matters before SAT," the Bench said.

The Court directed Bombay Dyeing, Nusli Wadia and other respondents to file their counter affidavits and ordered that all four connected appeals be heard together.

The dispute relates to 11 memoranda of understanding (MoUs) executed between Bombay Dyeing and group firm SCAL Services Ltd to the bulk sale of flats in Mumbai.

SEBI had alleged that the transactions enabled Bombay Dyeing to recognise revenue of ₹2,492.94 crore and profit before tax of ₹1,302.20 crore between FY12 and FY18. According to the regulator, the MoUs were sham transactions designed to artificially inflate the listed company's financial statements and mislead investors.

In its October 2022 order, SEBI imposed monetary and market access penalties exceeding ₹15 crore on Bombay Dyeing, promoters Nusli, Ness and Jehangir Wadia, SCAL Services, senior executives and directors.

However, in January this year, SAT, by a 2:1 majority, set aside SEBI's order. Technical Members Meera Swarup and Dheeraj Bhatnagar held that the projects were genuine and that the flats were eventually constructed and sold, concluding that SEBI had failed to establish fraud or artificial inflation of profits.

Presiding Officer Justice PS Dinesh Kumar said that SCAL functioned as an extended arm of Bombay Dyeing and that the company had recognised revenue and profits in a deceitful manner.

Appearing to SEBI, senior advocate Arvind Datar said that Bombay Dyeing had reduced its stake in SCAL from 49 per cent to below 19 per cent on March 29, 2012, causing SCAL to cease being an associate company. However, he submitted that the divested 30 per cent stake was transferred to another group entity rather than an independent third party, and that the first MoU was executed the very next day.

Datar told the Court that 11 MoUs worth about ₹3,333 crore were executed over two years and alleged that while Bombay Dyeing recognised sale proceeds in its books, SCAL did not record corresponding purchases and instead accounted only to an agency commission. He argued that the SAT majority ruling raised crucial questions relating to associate companies, lifting the corporate veil and the principle of a single economic entity.

Senior advocates Abhishek Manu Singhvi and Darius Khambata, appearing to Bombay Dyeing and the Wadia Group, opposed SEBI's request to a stay, submitting that SAT had fully exonerated the respondents on facts and that several findings upholding the genuineness of the transactions had not even been challenged by the regulator. They also pointed to the nearly nine-year delay in initiating proceedings.

The Supreme Court declined to stay the SAT ruling while issuing notice on SEBI's appeals.

Published on July 13, 2026