The Securities Appellate Tribunal on Wednesday reserved its orders in an appeal filed by Zee promoter Punit Goenka against a SEBI order barring him from the boards of Zee Group entities.
On Aug. 14, the Securities and Exchange Board of India, by a confirmatory order, barred Goenka and his father, Subhash Chandra, from the boards of four Zee Group entities for misappropriating the funds of Zee Entertainment Enterprises Ltd. for the benefit of Zee's associate entities.
They were barred from holding key positions in ZEEL, Zee Media Corp., Zee Studios, and Zee Akaash News Pvt. The bar also extended to any entity that came out of the merger or demerger of these entities. The order followed a June 12 interim order of the regulator that alleged a diversion of Rs 200 crore in the fixed deposit of Zee Entertainment with Yes Bank.
Also, SEBI will complete detailed investigations into the matter in eight months, as per the order.
Goenka appealed against the order on Aug. 25, calling the eight-month ban unjust and punitive
In the previous hearing, Goenka's counsel argued against the long, disproportionate order of SEBI that has implications for the Sony-Zee merger. According to him, there is no evidence to show that there was a circulation of funds between Essel Group entities, as alleged by SEBI. The transactions undertaken by Zee were purely commercial in nature and can be backed by years of commercial relationships.
However, according to the market regulator, the transactions between Zee and other entities and the time period within which they were executed clearly point towards a fund diversion. Further, there is no commercial rationale for transactions entered by Zee, it argued. It had the opportunity to prove the legitimacy of transactions by submitting GST documents or invoices, which it failed to do, the regulator argued.
During Wednesday's hearing, SEBI submitted that it will complete investigations into five of the transactions by Nov. 30, considering the tribunal's apprehensions on the eight-month-long investigation period proposed by it. However, there is still no clarity on the transactions referred to by the regulator.
The court has reserved its orders after hearing both parties.
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