SAT Refuses To Stay SEBI's Confirmatory Order Against Zee's Punit Goenka
SEBI said that it was merely a confirmatory order and that a detailed investigation will be conducted within 8 months.
The Securities Appellate Tribunal on Wednesday refused to stay a confirmatory order of SEBI barring Zee Entertainment Enterprises Ltd. promoter Punit Goenka from the boards of four Zee Group entities.
The SAT has directed the Securities and Exchange Board of India to file its reply by Sept. 4 and adjourned the matter for a final hearing to Sept. 8.
Goenka had approached the tribunal last Friday to seek interim relief against the market regulator's confirmatory order.
On Aug. 14, SEBI had prohibited Goenka and his father, Subhash Chandra, from holding any key positions on the boards of Zee Entertainment, Zee Media Corp., Zee Studios and Zee Akaash News, as well as any entity created by the merger or demerger of these entities. The regulator clarified that it was merely a confirmatory order and that a detailed investigation will be conducted within eight months.
According to Goenka's counsel, the order barring him from the directorship is long, disproportional, and unreasonable as he could be found innocent at the conclusion of the investigation.
The order is not preventive, but punitive. SEBI failed to take into consideration the established business relationships with the entities through which a circulation of funds was undertaken. The regulator has stigmatised them as circular transactions, he alleged.
The regulator has also not taken into consideration the corrective steps taken by the company after the interim order. An interim committee was formed to replace Goenka to take care of the day-to-day activities of Zee, he argued.
The fact that Zee would now function under a fresh board with its merger with Sony should also be taken into consideration. Goenka is in no position to influence a board primarily occupied by Sony's representatives, according to the counsel.
The court showed dissatisfaction with SEBI's order, but refused to grant any interim relief. It said the matter would be heard and disposed of finally.
This is the second time Goenka is approaching the appellate tribunal in the same matter. The father-son duo had earlier approached the tribunal against an interim order passed by SEBI in the case. The SAT had then refused to interfere with the SEBI order and had directed the tribunal to give an opportunity of hearing within a week of filing a reply.
Accordingly, SEBI heard them on July 31 and an order was passed on Aug. 14. The order confirmed a diversion of Rs 200 crore from Zee's funds for the benefit of Zee's promoter group entities under the chairmanship of Chandra.
