Relief for Zee Entertainment's Punit Goenka as SAT sets aside Sebi's order

The Securities Appellate Tribunal (SAT) on Monday set aside the order by the market regulator Securities and Exchange Board of India (Sebi) against Zee Entertainment Enterprises' promoter Punit Goenka, barring him from holding key positions in four Zee group firms and the merged entity with Sony Pictures Networks India.
 

With this, Goenka can now be appointed as the Managing Director (MD) of the merged entity.
 

In the order, Justice Tarun Agarwala directed Goenka to cooperate in the investigation while adding that if any violation is affirmed in the investigation, then the market regulator can take appropriate procedures.
 

In a confirmatory order issued in August, the Sebi had said that it would complete the investigation within eight months into the alleged siphoning of funds and circulation of money through related entities.
 

The tribunal noted that there is a delay in the issuance of an ex parte ad interim order and the alleged transaction is of the year 2019.
 

No further evidence has come on record to indicate any further diversion of funds. Consequently, the impugned order is "harsh and unwarranted" as there was no real urgency at this late stage in passing the ad interim order, as per the appellate tribunal.  Passing a restraint order at this stage virtually restrains the appellant from his right to continue as a Managing Director on the basis of a needle of suspicion, which in our opinion is unfounded, it added.
 

The matter pertains to a letter of comfort granted by Subhash Chandra, Goenka's father and the former chairman of the Essel Group, for the appropriation of a ~200 crore fixed deposit with YES Bank.
 

Sebi had first issued an interim order in June barring Chandra and Goenka from holding key managerial positions and directorship in all listed companies. However, SAT had directed Sebi to provide an opportunity of hearing to the Zee promoters and issue a fresh order within two months. The confirmatory order was issued in August by the Sebi chairperson.