The Securities Appellate Tribunal (SAT) on Wednesday reserved its decision on an appeal by Punit Goenka, the promoter of Zee Entertainment Enterprises. The appeal is against a directive by the market regulator, the Securities and Exchange Board of India (Sebi), disqualifying Goenka from holding leadership positions in four Zee companies, including the one that is about to merge with Sony Pictures .
Sebi had issued a confirmatory order in August saying it would conclude its eight-month probe into alleged misappropriation of funds and money laundering through affiliated companies.
The tribunal allowed one week for written submissions regarding the case.
Senior Counsel Darius Khambata, representing Sebi, said the regulator aims to complete its probe into five specific transactions by November 30. However, he acknowledged that additional time would be needed to scrutinize other transactions.
SAT had earlier questioned Sebi’s ability to stick to the stated timelines.
On behalf of Goenka, senior lawyer Abhishek Manu Singhvi argued that the Sebi directive did not serve the interests of investors. He alleged that the regulator had failed to show any loss suffered by Zee Entertainment or any profit made by Goenka as a result of the alleged transactions.
Singhvi described Sebi’s order as overly harsh and suggested that the eight-month investigation period could be the beginning of a longer investigation. Stating that Sebi was taking an excessive approach to a small issue, he added that all transactions cited by the regulator were legitimate and based on valid business reasons.
Singhvi further noted that the merged company’s board would mainly consist of Sony representatives. Even the Chief Financial Officer (CFO) would report directly to this board if necessary.
The case pertains to a letter of comfort issued by Subhash Chandra, Goenka’s father and former chairman of Essel Group, for appropriation of a fixed deposit of Rs 200 crore in Yes Bank.
Initially, Sebi had issued an interim order in June banning both Chandra and Goenka from key management roles and directorships in all listed companies. SAT later directed Sebi to grant a hearing to the Zee promoters and issue a revised directive within two months. The updated order came from the Sebi chairman in August.