Description

Securities Appellate Tribunal grants partial stay on SEBI order against Decipher Labs Ltd, requiring 50% deposit of disgorgement and penalty amount while staying certain business restrictions.

Summary

The Securities Appellate Tribunal (SAT) has issued an order dated September 16, 2025 in Appeal No. 421 of 2025 filed by Mr. Janakiram Ajjarapu & Others against SEBI in the matter of Decipher Labs Ltd. The Tribunal has granted partial relief by staying the direction at Paragraph 105(a) of the impugned SEBI order, allowing the company to continue developing its business. However, Appellants No. 1 and 2 must deposit 50% of the disgorgement and penalty amount within four weeks.

Key Points

  • Appeal admitted by SAT against SEBI order concerning Decipher Labs Ltd (Noticee)
  • Stay granted on direction at Paragraph 105(a) of the impugned order, allowing business development to continue
  • Appellants No. 1 and 2 (Mr. Janakiram Ajjarapu & Ors.) must deposit 50% of disgorgement and penalty amount within four weeks
  • No coercive action to recover disgorgement and penalty subject to 50% deposit
  • Appellants No. 1 and 2 permitted to sell shares in their demat account to comply with deposit requirement
  • Deposited amount to be placed in interest-bearing account
  • SEBI granted six weeks to file reply; rejoinder to be filed within three weeks thereafter
  • Next hearing scheduled for December 1, 2025

Regulatory Changes

No new regulatory changes introduced. This is an appellate order modifying the implementation of an existing SEBI enforcement order against Decipher Labs Ltd and associated parties.

Compliance Requirements

For Appellants No. 1 and 2:

  • Deposit 50% of the disgorgement and penalty amount within four weeks from September 16, 2025
  • Amount to be deposited in an interest-bearing account
  • May sell shares from demat account to meet deposit requirement

For SEBI (Respondent):

  • File reply within six weeks from order date
  • No coercive action to recover remaining disgorgement and penalty amounts subject to 50% deposit compliance

For Appellants:

  • File rejoinder (if any) within three weeks after SEBI’s reply

Important Dates

  • September 16, 2025: SAT order date
  • Within 4 weeks from September 16, 2025: Deadline for Appellants No. 1 and 2 to deposit 50% of disgorgement and penalty
  • Within 6 weeks from September 16, 2025: SEBI to file reply
  • Within 3 weeks after SEBI reply: Rejoinder deadline (if applicable)
  • December 1, 2025: Next hearing date
  • October 31, 2025: BSE circular publication date

Impact Assessment

Company Impact: Decipher Labs Ltd receives significant relief as the stay on Paragraph 105(a) allows the company to continue business development activities that would otherwise have been restricted under the SEBI order.

Individual Appellants Impact: Appellants No. 1 and 2 (Mr. Janakiram Ajjarapu and associates) face immediate financial obligation to deposit 50% of disgorgement and penalty within four weeks. However, they are protected from coercive recovery action for the remaining 50% and are permitted to liquidate shareholdings to meet the requirement.

Market Impact: Limited direct market impact. The order affects specific individuals and the company under SEBI enforcement action. Permission to sell shares may result in some market transactions but scope appears limited to compliance needs.

Precedential Value: Demonstrates SAT’s balanced approach in granting partial stays on SEBI orders - protecting business continuity while ensuring partial financial accountability through phased deposits pending full appeal hearing.

Impact Justification

SAT order modifies SEBI enforcement action against Decipher Labs Ltd, granting partial relief while requiring substantial financial deposit. Significant for company operations and involved parties.