SEBI Slashes Arun Panchariya's Penalty From ₹25 Crore To ₹20 Lakh In Winsome Yarns GDR Case

The Securities and Exchange Board of India (SEBI) has reduced the penalty imposed on Arun Panchariya, a key figure linked to the GDR fraud issue of Winsome Yarns Ltd., to Rs 20 lakh.

The reduction follows directions of the Securities Appellate Tribunal (SAT) to recompute the quantum of penalty in light of penalties imposed in similar cases and the absence of a conclusive money trail.

The matter was presided over by SEBI's Quasi-Judicial Authority, Biju S.

SEBI had originally found Panchariya guilty for his role in structuring a fraudulent Global Depository Receipts (GDR) scheme by Winsome Yarns Ltd. A penalty of Rs 25 crore was imposed in October 2020. This was later reduced to ₹15 crore in May 2024 after a remand by SAT. It has now been further reduced to Rs 20 lakh.

SEBI found that Panchariya, in connivance with Winsome and its directors, devised a mechanism by which GDRs worth approximately USD 13.24 million were issued in a misleading manner.

In the first leg of the transaction, the GDRs were structured to mislead Indian investors. They were made to believe that the securities were subscribed to by genuine foreign investors. In reality, they were subscribed through entities connected to Panchariya.

In the second leg, the GDRs were transferred to Foreign Institutional Investor (FII) sub-accounts. These included Aspire Emerging Fund (ASPIRE) and Highblue Sky Emerging Market Fund (HSEMF). These entities converted the GDRs into equity shares and sold them in the Indian securities market.

Panchariya challenged SEBI's October 2020 order before SAT. By its order dated November 29, 2023, SAT upheld the findings regarding his role in the first leg. However, it held that his connection with entities involved in the second leg was not proved. The matter was remanded for reconsideration of the second leg and the quantum of penalty. The tribunal also noted that the GDR proceeds had eventually returned to the company.

Pursuant to the remand, SEBI passed a fresh order on May 7, 2024. It imposed a reduced penalty of ₹15 crore. SEBI held that Panchariya was involved in both legs of the transaction based on a preponderance of probabilities.

This order was again challenged before SAT. By its order dated December 10, 2025, the tribunal allowed the appeal on the issue of penalty. It observed that in comparable GDR cases involving larger amounts, penalties of ₹20 lakh had been imposed. The matter was remanded to SEBI to recompute the penalty. The findings on merits were left undisturbed.

Upon re-examining the record, SEBI noted that Panchariya's role in the first leg stood established and had been affirmed by SAT. However, his involvement in the second leg could not be conclusively determined. There was no clear evidence of a money trail showing that proceeds from the sale of shares were received by him.

SEBI also observed that its earlier order of May 2024 had linked Panchariya to the second leg based on a preponderance of probability. However, such a conclusion could not be conclusively upheld in the absence of concrete evidence. It further noted SAT's finding that the GDR proceeds had eventually returned to Winsome Yarns. As a result, the earlier allegation that Panchariya's entity, Vintage FZE, had acquired GDRs free of cost was found to be unsustainable.

SEBI observed, “The Noticee cannot be said to have been conclusively involved in the second leg of the GDR transaction in view of the earlier orders of Hon'ble SAT and findings of the AO that money trail could not be established in the present case and there is nothing on record to establish that the proceeds from the sale of securities were eventually received by the Noticee.”

Taking into account SAT's directions, the absence of a proven money trail, and the penalties imposed in comparable cases, SEBI imposed a penalty of Rs 20 lakh on Panchariya under Section 15HA of the SEBI Act.

The order clarified that it is to be read in conjunction with SEBI's May 7, 2024 order.