EKI Energy Services has said it plans to challenge the Securities and Exchange Board of India’s (SEBI) October 30 order before the Securities Appellate Tribunal (SAT), disputing the regulator’s findings on alleged expense inflation and financial misrepresentation. The company’s response comes after SEBI barred EKI Energy from the securities market for two months and its Managing Director, Manish Kumar Dabkara, for 12 months.
The regulator also imposed monetary penalties totalling ₹88 lakh on the company and several current and former executives. EKI says the final order narrowed the disputed expense amount from ₹48 crore in the original show-cause notice to ₹26.34 crore. It also argues that the order records no quantifiable gain from the alleged defaults, no quantifiable investor loss and no repeat violation. These are the company’s stated grounds for contesting the findings, not a reversal of SEBI’s conclusions.
Why SEBI Took Action Against EKI Energy
SEBI’s October 30 order concerns the company’s financial disclosures and transactions during the financial years 2021-22 and 2022-23. The regulator found that EKI had recognised revenue prematurely and overstated expenses, affecting the financial information available to investors.
One major issue involved revenue of ₹197.04 crore that SEBI said EKI had recognised prematurely during the first three quarters of FY23. The regulator described the continued disclosure of this revenue as financial misrepresentation connected with investor decisions concerning the company’s listed shares.
SEBI also found that the company had overstated expenses by ₹26.34 crore across FY22 and FY23. According to the regulator, the expenses were booked against services that had not been rendered, and payments made against those entries resulted in the diversion of company funds.
The order held Dabkara responsible for the continued disclosure of misstated financial information and for failing to ensure adequate monitoring of the company’s financial reporting systems. Other executives and officials were also held liable for different regulatory violations.
EKI Disputes the ₹26.34 Crore Expense Finding
EKI’s main challenge concerns the regulator’s conclusion that ₹26.34 crore in expenses were overstated. The company said the original show-cause notice had alleged inflated expenses of ₹48 crore, but SEBI reduced the amount in its final order after examining the documents submitted by the company.
EKI argues that the remaining disputed amount should be reconsidered because it has supporting documents that it says were submitted to other authorities and independent experts. The company stated that SEBI’s order noted that EKI had not established that the documents submitted to the Ministry of Corporate Affairs, the Income Tax Department and independent experts were identical to those presented to the regulator.
The company now intends to place this material before SAT. The appeal will give EKI an opportunity to challenge the regulator’s assessment and present its explanation of the transactions.
The company also referred to an earlier review by the Ministry of Corporate Affairs. According to EKI’s disclosure, the ministry considered an inspection report under Section 206(5) of the Companies Act, 2013, and decided on April 2, 2026, that no penal action should be taken under Sections 447 and 448, which deal with fraud-related provisions.
However, the ministry’s decision and SEBI’s findings arise from separate regulatory processes. EKI’s reference to the MCA decision forms part of its argument before the tribunal; it does not automatically cancel SEBI’s order.
Company Explains the Revenue Recognition Dispute
Another important part of the case concerns the recognition of revenue from certain carbon-credit project contracts during the first three quarters of FY23.
EKI said the issue arose from a difference in professional judgment between its management and its then statutory auditor over the application of Ind AS 115, the accounting standard governing revenue from contracts with customers. The company described carbon-credit project contracts as a relatively new area of business that involved accounting judgments.
According to EKI, it adopted a more conservative accounting position and revised the figures before finalising the annual accounts for FY23. It said the revised figures were included in the audited financial statements and disclosed to stock exchanges at the time.
The company further stated that the underlying contract amounts had been received and that applicable income tax and GST had been paid. It also said SEBI treated the revision as a mitigating factor and noted that management had considered the accounting question.
SEBI’s concern, however, was that the earlier recognition of revenue had been disclosed to investors before the figures were revised. The tribunal will have to consider the company’s arguments alongside the regulator’s findings.
SEBI’s Penalties and Market Restrictions
The October 30 order imposed different market restrictions and financial penalties on the company and individuals associated with it.
| Individual or entity | Market restriction | Monetary penalty |
|---|---|---|
| EKI Energy Services | 2 months | ₹12 lakh |
| Manish Kumar Dabkara, MD | 12 months | ₹28 lakh |
| Mohit Kumar Agarwal, former CFO | 8 months | ₹19 lakh |
| Naveen Sharma, whole-time director | 5 months | ₹13 lakh |
| Sonali Sheikh, whole-time director | 1 month | ₹6 lakh |
SEBI also imposed penalties on independent directors Ritesh Gupta and Burhanuddin Ali Husain Maksi Wala, and former compliance officer Itisha Sahu. The regulator levied ₹4 lakh each on the two independent directors and ₹2 lakh on Sahu.
The penalties across the company and the individuals named in the order total ₹88 lakh. SEBI directed the concerned parties to pay the amounts within 45 days.
Separately, the regulator directed Dabkara to take immediate steps to recover the amount it found had been diverted from EKI Energy. This recovery direction is distinct from the monetary penalty imposed on him.
EKI Says Business Operations Remain Unaffected
EKI has maintained that the SEBI order does not prevent it from continuing its regular business activities. The company said its carbon project development, carbon-credit transactions, clean cooking programmes and sustainability advisory services for domestic and international clients are continuing.
The distinction is important because the market-access restrictions apply to securities-market participation for the specified periods. They do not amount to an order shutting down the company’s operating businesses.
EKI also highlighted its promoter shareholding during the period under review. It said promoters and promoter-group entities did not sell shares during the period and that promoter holding remained broadly stable at around 73.4% to 73.5%.
The company further stated that the order did not find that any of the disputed funds reached Dabkara, the promoters or their relatives. This is part of EKI’s response to the regulator’s findings and should not be confused with the separate conclusion that company funds were diverted through expenses SEBI considered fictitious.
The Bigger Picture
The case is significant for investors because it concerns the quality of financial disclosures made by a listed company operating in the carbon-credit and sustainability sector. Revenue recognition, expense verification and internal financial controls are particularly important in businesses where contracts, project delivery and credit transactions can involve complex accounting judgments.
The dispute also highlights the difference between a company’s public explanation and a regulator’s final findings. EKI has pointed to the absence of quantified investor losses and the reduction in the disputed expense amount, while SEBI has imposed restrictions based on its assessment of financial misrepresentation and fund diversion. The appeal process will determine whether the regulator’s conclusions and directions withstand scrutiny.
Looking Ahead
EKI is preparing to approach the Securities Appellate Tribunal under Section 15T of the SEBI Act, 1992. The company has indicated that it will submit additional documentary evidence concerning the disputed expenses and the accounting treatment of carbon-credit contracts. The tribunal’s consideration of the appeal will be an important next step in the regulatory dispute.
For investors, the key developments to watch will include the filing and outcome of the appeal, any interim relief granted by SAT, and whether the regulator’s directions are modified or upheld. Until the appellate process produces a decision, SEBI’s October 30 order remains the operative regulatory action. EKI’s ability to maintain confidence in its financial reporting and governance practices will remain central to how the market assesses the company.
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