SAT dismisses Zee’s Subhash Chandra, Punit Goenka’s appeal against SEBI order 

The Securities Appellate Tribunal (SAT), on Monday, dismissed an appeal from Zee Group Chairman Subhash Chandra and Zee Entertainment CEO Punit Goenka over a ban by markets regulator from holding board positions in public listed companies for a year. The Securities and Exchange Board of India's (SEBI) had restrained the duo on June 12 from holding any managerial or directorship position in listed entities on account of alleged fund diversion.

SAT said that it does not see merit in interfering in the regulator's order and also asked the duo to defend themselves before SEBI. It has given Chandra and Goenka two weeks to reply to SEBI.

Punit Goenka and Subhash Chandra were restricted by SEBI from holding any key management personnel (KMP) role following investigations into allegations by Yes Bank of appropriation of certain fixed deposits to square off loans of related entities of Essel Group.

As per the SEBI probe, Chandra had provided a ‘Letter of Comfort’ (LoC) towards credit facilities availed by certain group companies from Yes Bank. The SEBI order stated that the LoC was known only to a few people in the management, and even the ZEEL board was not aware of the letter.

The SEBI order stated that Chandra and Goenka “abused their position as directors/KMPs of a listed company for siphoning off funds for their own benefit”.

“...the funds had originated from ZEEL/other listed companies of Essel Group, which moved through multiple layers of Promoter Family owned/controlled entities and was ultimately transferred to ZEEL, in order to show the fulfilment of payment obligations of the Associate Entities towards ZEEL. The above flow of funds clearly indicates that there was no actual net receipt of funds by ZEEL and these were merely book entries to show receipt of funds,” added the SEBI order.

Furthermore, SEBI is in the process of conducting a detailed probe to “unravel the truth and complete picture”.

Zee Entertainment shares fell 5.81 per cent to hit a low of Rs 194.45 on BSE after the SAT order. The stock is down 18 per cent year-to-date.

Also read: SEBI bars ZEE's Subhash Chandra, Punit Goenka from holding directorial position

Also read: The Zee Crisis: Is the Subhash Chandra-led entertainment company's ongoing merger with Sony in jeopardy?