Securities Appellate Tribunal Quashes SEBI Order Against Punit Goenka In Zee Entertainment Case

This order comes after Goenka challenged the August 14 order passed by Sebi, which debarred ZEEL promoters, namely Goenka and Subhash Chandra.

SEBI earlier stated that Chandra and Goenka alienated the media firm's and Essel Group’s other listed companies’ assets for the benefit of associate entities, owned and controlled by them.

Source : Getty

The Securities Appellate Tribunal on Monday dismissed the Sebi order that barred Zee Entertainment Enterprises’ promoter Punit Goenka from holding major managerial positions in the company and other group firms. The tribunal set aside the market regulator’s order and directed Goenka to cooperate with Sebi in their probe against him. 

The tribunal in it’s order said, “If any material comes out against Goenka during the course of the investigation, then the appropriate procedure can be adopted by the regulator in accordance with the law,” as reported by PTI. This order comes after Goenka challenged the August 14 order passed by Sebi, which debarred ZEEL promoters, namely Goenka and Subhash Chandra, and restricted them from holding any crucial executive positions in the firm and other organisations, including the merged company of ZEEL and Sony Pictures Networks India. 

The order passed on Monday, noted that the market regulator’s ruling can’t be sustained and ‘is quashed insofar as it relates to the appellant (Goenka)’. The tribunal further said, “The restraint order passed by the respondent (Sebi) pursuant to the ad interim order and the confirmatory order restraining the appellant to function as a Managing Director and is set aside.”

However, the tribunal noted that if any ‘material’ emerges during the investigation against Goenka, the regulator is free to undertake proper action as per the law. The tribunal’s presiding officer, Justice Tarun Agarwala, said, “The appellant shall however cooperate in investigation. In the event any material comes out against the appellant during the course of the investigation, appropriate proceeds can be adopted by Sebi.”

Earlier this year in June, Sebi barred Chandra and Goenka from assuming directorial or any other major managerial positions in any listed firm on account of siphoning off funds of the media company. This mandate was followed by a confirmatory order from the regulator in August. 

Sebi had elaborated that Chandra and Goenka allegedly alienated the media firm's and Essel Group’s other listed companies’ assets for the benefit of associate entities, owned and controlled by them. The regulator noted that the siphoning of funds appeared to be a properly planned scheme as in some cases, the layering of transactions included as many as 13 entities as pass-through entities within the short time period of two days only.