As per case facts, the respondent company issued preferential shares, stating specific objects for fund utilization (capital expenditure, acquisitions, working capital, marketing, setting up offices, general corporate purposes). However, the ... funds were immediately diverted for investments and loans, which were not the disclosed objects. Later, the company amended its MOA and attempted to ratify the diversion. The Adjudicating Officer imposed penalties for violating SEBI regulations. The Securities Appellate Tribunal (SAT) set aside the penalties, accepting the company's argument of shareholder ratification. SEBI appealed to the Supreme Court. The question arose whether the SAT was justified in reversing the Adjudicating Officer's order and exonerating the respondents, particularly regarding the validity of post-facto ratification for fund diversion that violated statutory regulations and public trust. Finally, the Supreme Court held that the diversion of funds from stated objects for preferential issue constitutes a fraudulent activity and a clear breach of SEBI regulations. Such illegal acts, especially those affecting public interest and multiple stakeholders, cannot be made valid through subsequent shareholder ratification. The Court emphasized that investor protection and market integrity are public law dimensions, not private rights that can be waived. Therefore, the Supreme Court restored the Adjudicating Officer's order, emphasizing the importance of fair disclosure and the non-ratifiable nature of statutory violations.