ZEE stock dips as SAT refuses interim relief to Punit Goenka

The Zee Entertainment stock fell as much as 1.1% today after the Securities Appellate Tribunal (SAT) asked capital markets regulator SEBI to submit a reply in the Zee Entertainment case by September 4, 2023, and refused to provide interim relief to Punit Goenka, former ZEE CEO. The matter has been listed for hearing on September 8, 2023.

The stock opened a gap up at ₹267.95, up from ₹266.20 during the previous closing session, and rose to an intra-day high of ₹268.20. The stock is currently trading below a 52-week high of ₹290.50 achieved on August 10, 2023.

The Securities and Exchange Board of India (SEBI) had June 12, 2023, passed an “Interim Order” against Subhash Chandra and Punit Goenka, barring them from holding the position of a director in any listed company or its subsidiaries until further orders.

Following the company's appeal before the appellate tribunal, SAT on July 10, 2023, passed an order, saying it finds no "reason to interfere in the impugned order". The SAT also disposed of the appeals, directing the appellants to file a reply or objection along with a stay-vacating application against the interim order.

After the SAT order, the company filed written replies on July 24, 2023. In the meantime, SEBI filed a "miscellaneous application" before the appellate tribunal, seeking clarification with respect to the appointment of the quasi-judicial authority.

On July 27, SAT directed SEBI to appoint another WTM. "If no WTM is available, then any authorised officer higher in grade or rank or position to the WTM would hear and decide the matter,” SAT said.

Following this, an opportunity for a personal hearing was granted to Zee, and certain additional information was sought. On August 8, 2023, the Zee promoters submitted their replies on the matter.

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.

"The Interim Order must also fall as reliance has been placed while passing the Order in the matter of Shirpur Gold Refinery Ltd. to which the Entities were not a party to, with no notice given to the Entities and no opportunity of being heard given to the Entities," the Zee promoters' submission says.

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

In the meantime, SEBI earlier this month passed another order, barring Goenka and Chandra from the boardrooms of four Zee group companies -- Zee Entertainment, Zee Media Corporation, Zee Media Corp, and Zee Aakash News.

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.

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