The Securities Appellate Tribunal (SAT) on September 14 questioned the Securities Exchange Board of India (SEBI) on whether it will be able to finish the investigation against Punit Goenka, former chief executive officer of Zee Entertainment Enterprises Ltd (ZEEL).
SAT further remarked that SEBI has on a lot of occasions sought for extension of time to investigate allegations from either the Supreme Court or SAT.
Senior counsel Darius Khambata, who appeared for SEBI informed the tribunal that while the investigation is likely to be completed in eight months as per SEBI's chairperson, he will take further instruction and apprise them of the same.
During the course of the hearing, Khambata took SAT through various documents to substantiate SEBI's case. He argued that while the shareholders of ZEEL approved its merger with ZEEL and asked Punit Goenka to lead the merged entity as the CEO for five years, they may not have been aware of these transactions.
SAT also termed that SEBI's investigation against Goenka 'appears to be a witch hunt' as according to it, the regulator has launched its investigation in various directions which may not be relevant. However, Khambata countered SAT's apprehension by arguing that an exhaustive investigation was required to reach an accurate conclusion.
Punit Goenka's lawyer, Abhishek Manu Singhvi is expected to commence his rejoinder arguments at 430 PM on September 14.
In August, SEBI passed an order revising the directions it had given to ZEEL's former directors Subash Chandra and Goenka, asking its investigating officials to complete the enquiry in eight months. It further barred them from holding key managerial positions till the conclusion of the investigation.
First round of litigation at SAT:
In June, the regulator passed an interim order that said that Chandra and Goenka were not to hold any board or key managerial position in ZEEL, its subsidiary companies or any company resulting from a merger with these companies.
Goenka and Chandra appealed against this order at the SAT, but the tribunal refused to stay the same. The father-son duo were directed by SAT to file a reply/objection along with an application to vacate the stay given in the interim order.
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.
In December 2021, Zee Entertainment and Sony Pictures reached an agreement to combine their businesses.
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