Zee row: SAT sets aside Sebi bar on Punit Goenka from holding key managerial slots

SAT rules in favour of Punit Goenka, allows him to hold key managerial positions.

In a positive development for Zee Entertainment Enterprises Limited (ZEEL), the Securities Appellate Tribunal (SAT) on October 30, allowed an appeal by Punit Goenka, its former top executive, setting aside the  Sebi order barring him from holding key managerial positions in the company and other firms.

The SAT further directed Goenka to cooperate with Sebi's investigation. It had reserved the case for judgment on September 27.

At 11:32am, Zee Entertainment Enterprises was quoting at Rs 256.20, up Rs 7.10, or 2.85 percent, on the BSE.

Goenka had challenged an order by the Securities Exchange Board of India (Sebi) passed in August, asking its investigating officials to complete the enquiry in eight months. The order also barred ZEEL's former directors Subash Chandra and Goenka from holding key managerial positions  till the investigation is over.

First round of litigation at SAT

Goenka approached SAT the second time over the same issue. In June, the regulator passed an interim order that had said that Chandra and Goenka were not to hold any board or key managerial position in ZEEL, its subsidiary companies, or in any company resulting from a merger with these companies.

Goenka and Chandra appealed against this order at the tribunnal, but it refused to stay the same. The father-son duo were directed by SAT to file a reply or objection along with an application to vacate the stay given in the interim order.

Subsequently, the market regulator issued the notices for an opportunity for personal hearing on July 31 and asked for additional documents to better appreciate their submissions. Its August order was passed pursuant to this hearing.

Why did Sebi ban Goenka and Chandra?

The market regulator alleged that the duo helped move funds out of ZEEL and routed them back to the company through layered and circuitous transactions. They did so by “falsely portraying that ZEEL had received the dues from associate entities”, it said.

Sebi had alleged that Chandra and Goenka had "abused their positions" for personal financial gains. It noted that the Mumbai-based media house had faked the recovery of loans to cover for private financing deals by its founder Chandra.

Zee-Sony merger

These developments coincide with the National Company Law Tribunal (NCLT) approving the merger of ZEEL with Culver Max Entertainment, earlier Sony Pictures Networks India, on August 10.

The merger is said to create a $10-billion media giant, with the combined entity owning over 70 TV channels, two video streaming services—Zee5 and SonyLiv—and two film studios— Zee Studios and Sony Pictures Films India.