Description

SAT stayed SEBI order against Sandeep Ghate and Instafin Financial Advisors LLP subject to 50% penalty deposit in Droneacharya Aerial Innovations IPO manipulation case.

Summary

The Securities Appellate Tribunal (SAT) on December 18, 2025, granted a conditional stay on SEBI’s order against Sandeep Ghate (Noticee No. 5) and Instafin Financial Advisors LLP (Noticee No. 4) in the Droneacharya Aerial Innovations Limited matter. The stay is subject to deposit of 50% of the penalty amount within four weeks. The appellants were found to have aided and abetted violations of PFUTP Regulations in connection with pre-IPO placement activities.

Key Points

  • SAT admitted appeals by Sandeep Ghate (Appeal No. 542/2025) and Instafin Financial Advisors LLP (Appeal No. 543/2025)
  • Appellants are Noticee Nos. 4 and 5 in SEBI proceedings related to Droneacharya Aerial Innovations IPO
  • SAT granted stay on SEBI order subject to 50% penalty deposit within four weeks
  • Penalty amount to be kept in interest-bearing account with lien marked to SEBI
  • SAT noted operation of impugned order affects appellants’ livelihood and violates Article 21
  • Respondent (SEBI) granted six weeks to file reply, appellant gets three weeks thereafter for rejoinder
  • Next hearing scheduled for March 18, 2026

Regulatory Context

Background of Case:

  • Appellants were in business of identifying angel investors for start-ups
  • Noticee No. 5 introduced angel investors and his daughter invested in the company
  • Daughter and other initial investors sold shares after IPO
  • SEBI’s Quasi-Judicial Authority found appellants aided and supported Noticee No. 2 in pre-IPO placement
  • Authority noted appellants actively aided and abetted activities of Noticee Nos. 1, 2, and 3

SAT Findings:

  • No specific finding of PFUTP Regulation violation directly attributable to appellants
  • Investigation report silent on whether shares sold by appellant’s daughter benefited Noticee No. 2
  • Purpose of share transfer not established
  • SAT held that preventing appellants from continuing business affects livelihood and violates constitutional rights

Compliance Requirements

For Appellants (Sandeep Ghate and Instafin Financial Advisors LLP):

  • Deposit 50% of penalty amount within four weeks from December 18, 2025 (by January 15, 2026)
  • File rejoinder within three weeks after receiving SEBI’s reply
  • Appear for next hearing on March 18, 2026

For SEBI:

  • File reply within six weeks from December 18, 2025
  • Maintain deposited amount in interest-bearing account with lien marked to SEBI

Important Dates

  • December 18, 2025: SAT order date
  • January 15, 2026 (approx.): Deadline for 50% penalty deposit (four weeks from order)
  • January 29, 2026 (approx.): Deadline for SEBI to file reply (six weeks from order)
  • February 19, 2026 (approx.): Deadline for appellant’s rejoinder (three weeks after SEBI reply)
  • March 18, 2026: Next hearing date

Impact Assessment

Market Impact:

  • Limited direct market impact as order pertains to intermediaries rather than company operations
  • May affect sentiment around Droneacharya Aerial Innovations stock due to ongoing regulatory scrutiny
  • Sets precedent for intermediaries involved in pre-IPO placements

Regulatory Impact:

  • Demonstrates SAT’s consideration of livelihood rights under Article 21 when granting stay
  • Establishes precedent for conditional stay on 50% penalty deposit
  • Highlights importance of clear findings linking intermediaries to PFUTP violations
  • May influence future enforcement actions against financial intermediaries

Business Impact:

  • Appellants can continue business operations pending appeal resolution
  • Financial burden reduced to 50% penalty deposit versus full penalty
  • Uncertainty remains until final appeal resolution in 2026

Impact Justification

SAT granted conditional stay on SEBI order against intermediaries in IPO manipulation case, significant for regulatory enforcement precedent but limited direct market impact