The Securities Appellate Tribunal (SAT) has refused any interim relief to Essel Group chairman Subhash Chandra and his son and Zee Entertainment Ltd managing director and chief executive Punit Goenka against an order by the Securities and Exchange Board of India (SEBI), which banned them from holding a director or key managerial position in any listed company.
The appellate tribunal, in its order, has asked the capital markets regulator to file a reply in the next 48 hours in response to Chandra and Goenka's appeals. Justice Tarun Agarwala, presiding officer, SAT, passed an order, saying after hearing arguments from both sides, it's clear that "an interim order at this stage would be virtually allowing the appeals".
Consequently, the order said, "We should decide the appeals finally...in this regard, parties have agreed that they will file their reply at the earliest possible moment," says the order.
"Let a reply be filed by the respondent within 48 hours. The reply would be served upon the appellants on or before 2.00 p.m. on 17.06.2023. Rejoinder, if any, may be filed on or before June 19, 2023," the order further said, adding the matter will be listed for disposal on June 19.
The Zee Entertainment Enterprises stock is trading 1.85% up today at ₹190.1, up from ₹186.65 on the National Stock Exchange. Since the SEBI order in the past week, the stock has tumbled 1.88%.
After confirming siphoning off of funds worth ₹200 crore for their own benefit, the SEBI on June 12 banned Chandra and Goenka from holding the position of a director or key managerial personnel in any listed company or its subsidiaries.
The case pertains to SEBI's probe after the resignation of two independent directors (Sunil Kumar and Neharika Vohra) of Zee in November 2019 after raising concerns over several issues, including the appropriation of certain fixed deposit (FD) of ZEEL by Yes Bank Ltd (Yes Bank) for squaring off loans of related entities of Essel Group.
The probe revealed Chandra, the then chairman of ZEEL/Essel Group, provided a ‘letter of comfort’ on September 4, 2018, towards credit facilities availed by certain group companies from Yes Bank. Neharika Vohra's resignation letter to then ZEEL chairman showed this LoC was known only to a few persons in management and even the board of ZEEL was not aware of the same, SEBI said.
On the strength of the LoC, Yes Bank adjusted a fixed deposit of ₹200 crore of ZEEL for meeting the obligations of seven entities, including Pan India Infraprojects, Essel Green Mobility, Essel Corporate Resources, Essel Utilities Distribution Company, Essel Business Excellence Services, Pan India Network Infravest, and Living Entertainment Enterprises.
These associate entities were owned or controlled by family members of Chandra and Goenka, the promoter family that is also the beneficial owner of promoters of ZEEL, found SEBI.
SEBI said Chandra and Goenka were the "direct beneficiaries" of the alleged fund diversion since the associate entities that benefitted from the "liquidation of FD of ZEEL by Yes Bank were owned or controlled by the promoter family", the order said, adding that both abused their position by siphoning off funds for their own benefit.