SAT sets aside SEBI order against Zee’s Punit Goenka

In a relief to Zee Entertainment Enterprises Ltd (ZEEL) promoter Punit Goenka, the Securities Appellate Tribunal (SAT) today set aside an order barring him from holding key managerial positions in the company and other associated firms.

The appellate tribunal also directed Goenka to cooperate with the investigation being carried out by the capital markets regulator. The current SAT order will eventually pave the way for Goenka to resume his role as MD & CEO of Zee and head the merged entity (Zee and Culver Max), which has already received NCLT approval.

Amid the news, the Zee Ent stock was trading 1.41% up at ₹252.60 on the BSE. The stock opened slightly up at ₹249.2 and surged to an intra-day high of ₹258.20. At the current share price of ₹249.10, the Zee stock is trading 13% down from the 52-week high achieved on August 10, 2023. With this, the m-cap of the company stands at ₹24,286.73 crore.

Goenka earlier challenged the SEBI order, which barred its promoters Subash Chandra and Punit Goenka from taking managerial roles in any of the Zee group companies.

The current SAT decision comes as a relief to Goenka as on June 12, 2023, as it had earlier refused to provide interim relief to him. The Zee promoters have denied the observations made against them in the SEBI interim order, saying the interim order must fall because it had relied upon information, which was gathered during the course of settlement proceedings, which is contrary to the established provisions of the SEBI.

They say there is no evidence available on record to prove that fund transactions were mere bogus book entries without any consideration.

The case against them 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 appropriation of certain fixed deposit (FD) of ZEEL by Yes Bank Ltd (Yes Bank) for squaring off loans of related entities of Essel Group. SEBI alleged that Chandra and Goenka were the "direct beneficiaries" of the alleged fund diversion and that both abused their position by siphoning off funds for their own benefit.

Notably, the National Company Law Tribunal (NCLT) in August also gave its nod to the much-awaited merger proposal of media & entertainment major Zee Entertainment Enterprises Ltd with Sony Networks India (now known as Culver Max Entertainment).

The deal was announced in December 2021 to merge the two big entities to create the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing legal battles with capital markets regulator SEBI.

In September 2023, however, IDBI Bank and Axis Finance filed appeals before the NCLAT (National Company Law Appellate Tribunal), Delhi, challenging the NCLT approval for the merger.