Sebi bars Subhash Chandra, Punit Goenka from holding directorial, key managerial roles

Guarantees for the loans taken by associate entities had been given without ZEEL’s board’s approval

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26 Aug, 2025 12:21

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The Securities and Exchange Board of India (SEBI) has banned Essel Group Chairman Subhash Chandra and Zee Entertainment Enterprises (ZEEL) CEO Punit Goenka from holding any directorial or key managerial position in listed companies or their subsidiaries. The market regulator passed this order after its investigations found that Chandra and Goenka abused their position as directors/KMPs of a listed company for siphoning off funds for their own benefit.

An interim order passed on June 12 by SEBI said that, “the Noticees (Chandra and Goenka) shall cease to hold the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries until further orders.”

The order is to be read with the interim order dated April 25, 2023 passed in the matter of Shirpur Gold Refinery Ltd, the regulator added.

Also read: Sebi issues notices to Essel Group's Amit Goenka, 7 others in Shirpur Gold Refinery fund diversion case

The order stated, "the Noticees alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of Associate Entities, which are owned and controlled by them. The siphoning of funds appears to be a well-planned scheme since, in some instances the layering of transactions involved using as many as 13 entities as pass through entities within a short period of two days only."

It added that there were no processes and structures inside ZEEL to stop poor governance practices, and that the flagship company of the group ZEEL was "used like a piggybank by the Noticees (Chandra and Goenka)".

The investigators pointed to the share price of ZEEL falling from Rs 600 to Rs 200 over FY19 to FY23, despite the company being so profitable, and said that it showed that "all was not well with the Company".  It added, that during this period, the promoter shareholding dropped from 41.62% to current level of 3.99%.

The beginning

Investigation into both parties had begun following the resignation of two independent directors — Sunil Kumar and Neharika Vohra — of ZEEL in November 2019. They had raised concerns over several issues, including the fact that ZEEL’s fixed deposit was appropriated by Yes Bank to settle a loan taken by ZEEL’s related entities.

But the guarantees for the loans had been given without ZEEL’s Board’s approval.

A Sebi investigation revealed that Chandra had provided a “Letter of Comfort” or LoC dated September 4, 2018, that was towards a Rs 200 crore loan outstanding  Essel Group Mobility. The letter said that the Rs 200 crore FD available with Yes Bank from any of the Essel Group companies, including ZEEL, could be taken to settle it. Thus, Yes Bank had adjusted the loans of seven associate entities with this Rs 200 crore of ZEEL.

Later it came to light that these seven entities were owned/controlled by family members of Subash Chandra and Punit Goenka, according to the Sebi order.

When Sebi probed further, ZEEL submitted that Rs 200 crore had been returned by the associate entities to ZEEL. But, since Chandra and Goenka had signed the LoCs without consulting or informing the Board, both were found to have violated provisions under Sebi (Listing Obligations and Disclosure Requirements) 2015 or LODR Regulations.

More reports: Zee Ent slumps after SEBI cracks down on Chandra, Goenka; Sony merger under a cloud

Therefore the market regulator started adjudication proceedings against ZEEL, Chandra and Goenka. It rejected a settlement application filed by ZEEL and Goenka.

When Sebi asked for the details of payments received by ZEEL from the associate entities, the reply from ZEEL claimed that all funds had been returned in full between September 26, 2019, and October 10, 2019.

However, on further investigation, the regulator found that the returned money belonged to ZEEL and that it was merely routed through various other entities — or layered — to seem like it was being returned by the associate entities.

“The funds had followed a circuitous route where funds originated from ZEEL/listed companies of Essel Group, passed through various entities owned or controlled by Promoter Family and ultimately ended up with ZEEL,” said the Sebi order.

ZEEL was also found to have claimed falsely in its annual report of FY20 that it had received all the funds from the associate entities.

“Since the payments from associate entities have been found to be bogus book entries, the said disclosure in the annual report appears to be a misstatement/misrepresentation,” said the Sebi order.

Also read: Zee Entertainment: More wait on the sidelines 

The Sebi order said, “In view of the above observations and findings, it is apparent that the issuance of LoC to Yes Bank by Mr Subhash Chandra in support of Associate Entities, the default by Associate Entities leading to appropriation of ZEEL’s FD by Yes Bank, the circuitous transactions through connected entities to show receipt of funds by ZEEL from the associate entities, the subsequent disclosure by ZEEL in its annual report about the receipt of funds and the false submissions made to Sebi were part of an elaborate scheme orchestrated by the promoter family of ZEEL to divert assets of ZEEL and other listed companies of Essel Group to the promoters.”