SEBI rejects Bajaj Hindusthan plea; probe proceeds in 2026

What SEBI decided and why it matters

The Securities and Exchange Board of India (SEBI) has rejected preliminary objections raised by Bajaj Hindusthan Sugar Limited and its promoters, Shishir Bajaj and Kushagra Bajaj, in an alleged fund diversion case. The decision clears the way for adjudication proceedings to continue on merits, rather than being halted on a jurisdiction challenge at the threshold.

The regulator’s probe relates to alleged diversion of funds through Ojas Industries and Bajaj Power Generation. SEBI has also linked the matter to alleged non-disclosure of related-party transactions over a long period, between FY11 and FY22. For investors, the order is significant because it indicates SEBI’s view that it has the authority to examine the alleged fund flows and disclosures tied to a listed company.

Allegations flagged earlier by the market regulator

SEBI had earlier said its investigation found prima facie evidence of diversion of funds in two channels. The first was alleged diversion of INR 318.5 crore through Ojas Industries. The second was alleged diversion of INR 870.6 crore through Bajaj Power Generation.

Alongside these alleged transactions, SEBI also flagged what it described as misleading disclosures in annual reports. The regulator’s probe also covers alleged non-disclosure of related-party transactions between FY11 and FY22, which is central to how investors assess governance and financial reporting.

The company’s preliminary defence: forensic audits and jurisdiction

Bajaj Hindusthan Sugar argued that SEBI should not pursue the matter because forensic audits conducted by Deloitte and Mazars had found no diversion or misappropriation of funds. These audits were carried out during Reserve Bank of India (RBI)-mandated debt restructuring exercises, according to the information provided.

On that basis, the company contended that SEBI lacked jurisdiction to continue with the case. The thrust of the argument was that independent forensic reviews commissioned in a banking and restructuring context did not find wrongdoing, and therefore the securities regulator should not proceed.

SEBI’s reasoning: what the forensic audits did not cover

SEBI rejected the defence and pointed to the scope of the forensic audits relied upon by the company. The regulator noted that the cited forensic audits did not examine the bank accounts of OIPL and BPGPL, through which the alleged diversion was said to have taken place.

This distinction matters because SEBI’s case, as described, hinges on fund flows routed through specific accounts and entities. If the audits did not test or review those accounts, SEBI’s position is that the audits cannot be treated as conclusive for the issues under the regulator’s probe.

Adjudication to proceed on merits

By rejecting the preliminary objections, SEBI has indicated that the adjudication process will continue on merits. In practical terms, this means the regulator will proceed to examine evidence and submissions on the alleged diversion and disclosure issues, instead of closing the matter due to a jurisdiction challenge.

The order also signals SEBI’s stance on its authority to probe alleged fund diversion claims where the allegations intersect with disclosures to stock market investors, including annual report statements and related-party transaction disclosures.

Related court reference mentioned in the material

The information provided also references a matter titled “Order in the matter of M/s. Bajaj Hindustan Sugar Ltd. V/S. Securities and Exchange Board of India (Writ Petition No. 3409 of 2024)” dated May 08, 2024. The text does not provide further detail on the outcome in that writ petition beyond the caption and date.

Given the limited information in the material, the key current development remains SEBI’s rejection of the company and promoters’ preliminary objections in the alleged fund diversion probe.

NCLT insolvency petition: SBI withdrawal and dismissal

Separately, the provided material includes details of an insolvency-related development involving the National Company Law Tribunal (NCLT). It states that NCLT dismissed a petition against Bajaj Hindusthan Sugar after considering submissions made by the State Bank of India (SBI) for withdrawal of the petition.

SBI filed a withdrawal application stating that its outstanding amount had been paid by Bajaj Hindusthan Sugar. The material also states that the company owed banks about INR 4,771 crore and had availed of two debt-restructuring schemes. It adds that the maximum amount of dues was from SBI, around INR 1,192 crore, and that lenders had declared Bajaj Hindusthan Sugar a non-performing asset before taking it to the tribunal.

What the NCLT order said, as reported

The NCLT ruling quoted in the material notes that, in view of the averments in the withdrawal application and the statement made by counsel for the financial creditor, and with no objection from the corporate debtor’s counsel, the application was allowed and the main petition was dismissed as withdrawn. The order also states that all parties were left to their further rights and remedies in accordance with law.

The material also refers to a previous order dated 13 October 2023, which recorded that the creditor’s counsel stated the outstanding amount had been paid and that an application for withdrawal would be moved.

Stock movement references in the material

The provided text includes two separate price-movement references. It states that shares of Bajaj Hindusthan Sugar were trading at INR 23.99, up by 2% at 1.15 PM. It also states that the stock rose more than 9% on Thursday on BSE after a newsbreak was confirmed that SBI had decided to withdraw the insolvency petition.

These references underscore how legal and regulatory updates can coincide with sharp moves in a heavily watched, lender-linked stock, especially when the news relates to insolvency proceedings or regulatory actions.

Key facts at a glance

Analysis: why the SEBI order is a procedural inflection point

The immediate significance of SEBI’s order lies in its procedural impact. By rejecting the jurisdiction plea, SEBI has ensured that the adjudication will address the substance of the allegations, including the claimed fund flows and the disclosure framework covering FY11 to FY22.

The regulator’s focus on what the forensic audits did not examine is also a key factual element in the dispute. SEBI’s position, as stated, is that audits conducted in a debt restructuring context cannot be treated as determinative if they did not review the specific accounts through which the alleged diversion was said to have occurred.

In parallel, the insolvency petition withdrawal and NCLT dismissal referenced in the material show a separate legal track involving lenders and payment of outstanding dues. Taken together, the updates illustrate that the company has faced scrutiny across both regulatory and creditor-driven processes, though the SEBI probe and the NCLT proceedings address different questions and legal frameworks.

Conclusion

SEBI’s rejection of Bajaj Hindusthan Sugar’s preliminary objections means the regulator’s adjudication on alleged fund diversion and disclosure lapses will proceed on merits. Separately, the material also records that NCLT dismissed SBI’s petition as withdrawn after dues were stated to have been cleared, keeping further rights and remedies open under law.