The Securities Appellate Tribunal (SAT) has made a decision to reject a request for temporary relief from Subash Chandra, chairman of the Essel Group, and his son Punit Goenka. This request was made in response to a recent order by the Securities and Exchange Board of India (Sebi) that prohibited them from holding directorial or key managerial positions in any listed company.
In response to an appeal filed by Chandra and Goenka, the SAT has asked Sebi to provide a reply within 48 hours. The tribunal has scheduled the matter for resolution on June 19. The SAT justified its decision by stating that granting interim relief at this stage would essentially be allowing the appeals, and therefore, it believes that the appeals should be finally decided.
The actions taken by Sebi against Chandra and Goenka, who is the Managing Director and CEO of Zee Entertainment Enterprises Ltd (ZEEL), were prompted by allegations of fund misappropriation within ZEEL. Consequently, Chandra and Goenka chose to challenge the Sebi order at SAT.
According to their plea, they were not issued any show cause notice, and the principles of natural justice were not adhered to. This information was shared by sources familiar with the matter.
Sebi, in its interim order, observed that Chandra and Goenka had transferred the assets of ZEEL and other listed companies belonging to the Essel Group for the benefit of their associate entities, which they own and control. The case revolves around Chandra, who was also the chairman of ZEEL during the alleged violations, and Goenka, who allegedly abused their positions as directors or key managerial personnel of a listed company by siphoning off funds for personal gain. Sebi mentioned that the misappropriation of funds appears to be a well-planned scheme, as it involved the use of as many as 13 entities as pass-through entities within a short span of just two days.
This order from Sebi follows an examination conducted after the resignation of two independent directors, Sunil Kumar and Neharika Vohra, from ZEEL in November 2019. The directors had raised concerns about various issues, including the appropriation of certain Fixed Deposits (FDs) of ZEEL by Yes Bank to clear off loans of related entities within the Essel Group. Vohra alleged that bank guarantees were given to a subsidiary without approval from ZEEL’s board.