Sebi’s interim order in Zee case: SAT to hear appeal on Monday

The Securities Appellate Tribunal (SAT) has directed the capital markets regulator Securities and Exchange Board of India (Sebi) to file a reply within 48 hours in response to an appeal filed by Subash Chandra and Punit Goenka. 

Chandra, the former chairman of Zee Entertainment Enterprises, and Goenka, the MD and CEO of the media major, filed an appeal with the tribunal, challenging the Sebi order that barred the duo from holding directorship in any listed entity. Sebi said Chandra and Goenka had allegedly abused their positions in the company and siphoned off funds for their own benefit. 

While giving Sebi time to reply, the tribunal posted the matter for disposal on Monday. 

Senior Counsel Janak Dwarkadas, appearing on behalf of Goenka, confirmed the development and said that while SAT has given Sebi 48 hours to file a reply, the appellants have also been given liberty to file a rejoinder after the Sebi reply and the case will be taken up for disposal on Monday, June 19. 

This assumes significance as the Sebi order has directed Zee Entertainment Enterprises to place the order before the board of directors “within 7 days from the date of receipt of the Order”. The order was passed on June 12. 

“The best possible scenario for Chandra and Goenka is a stay on Monday since the seven-day deadline is already in force,” said a corporate lawyer, not wishing to be named. 

“SAT did not grant any stay and so the interim order of Sebi stays. On Monday, it is likely to be an elaborate hearing with some clarity on the way forward. A stay in the current scenario will be ideal for Chandra and Goenka,” he added. 

The interim order by the capital markets regulator comes on the back of an investigation into allegations related to appropriation of certain fixed deposits of Zee Entertainment Enterprises (ZEEL) by YES Bank for squaring off loans of related entities of Essel Group.  

According to the Sebi probe, Chandra, the then chairman of ZEEL/Essel Group, had provided a ‘Letter of Comfort’ (LoC) towards credit facilities availed by certain group companies from YES Bank. 

More importantly, the LoC was known only to a few persons in the management and even the board of ZEEL was not aware of the letter, stated the Sebi order.