Mumbai: The Securities Appellate Tribunal (SAT) has rejected an appeal from Subhash Chandra, Chairman of Zee Group, and Punit Goenka, CEO of Zee Entertainment, seeking an interim stay on the market regulator SEBI’s order that prohibits them from holding board positions in public listed companies for one year. It has been reported that Goenka and Chandra will be submitting a response to SEBI within two weeks regarding the interim order. The decision comes after SEBI issued an ex-parte interim order on June 12, restraining Chandra and Goenka from holding any directorship or key managerial positions in listed entities due to alleged fund diversion.
During the arguments, SEBI’s counsel Darius Khambata stated in late June that the material gathered by the market regulator over the past four months indicated possible fund diversion and ongoing investigations. Khambata emphasized that SEBI’s actions were based on evidence. On the other hand, senior advocate Janak Dwarkadas, representing Goenka, argued that Sebi’s interim order infringed upon their fundamental rights to be employed by removing two key individuals from the company. Dwarkadas further highlighted that while SEBI had issued the interim order against them, no direction had been issued against Yes Bank for appropriating the Rs 200 crore fixed deposit without ZEEL’s (Zee Entertainment Enterprises Ltd) approval. He also argued that investigations had not found any active irregularity or evidence of bogus transactions involving the promoters.
The ban imposed by SEBI on Goenka has raised concerns about potential delays in the proposed merger between Zee and Sony Group’s Indian unit. The merger, announced in 2021, aims to create a $10 billion TV enterprise, with Goenka set to become the managing director and CEO of the merged entity. However, regulatory approvals for the merger are still pending. Sony Pictures Entertainment expressed seriousness regarding SEBI’s interim order and stated that it would monitor any developments that might impact the deal. “We take very seriously the SEBI interim order and will continue to monitor developments that may affect the deal,” Sony’s statement said.
The rejection of the appeal by SAT and the continuation of SEBI’s ban have sparked concerns among industry observers about potential delays or complications in the Sony deal, adding further uncertainty to the ongoing merger process.
