Subhash Chandra, ZEEL MD & CEO move SAT to challenge Sebi's order

Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka have moved the Securities Appellate Tribunal challenging the Sebi interim order that barred them from holding the position of a director or key managerial personnel in any listed company, sources said.

Market regulator Sebi took action against Chandra and Goenka for allegedly siphoning off funds of Zee Entertainment Enterprises Ltd (ZEEL).

They have challenged the Sebi order at Securities Appellate Tribunal (SAT) and the hearing is slated for Thursday (June 15), sources in the know of the development said.

As per their plea, there was no show cause notice issued to them and the principles of natural justice were not followed, the sources added.

Comments from ZEEL could not be obtained as an e-mailed query remained unanswered.

In its interim order, Sebi noted that Chandra and Goenka alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them.

The case pertains to Chandra, who was also the chairman of ZEEL during the alleged violation, and Goenka having abused their position as directors or KMPs of a listed company for siphoning off funds for their own benefit.

Sebi had stated that the siphoning of funds appears to be a well-planned scheme since, in some instances, the layering of transactions involved using as many as 13 entities as pass-through entities within a short period of two days only.

On Monday, in a statement, ZEEL Chairman R Gopalan stated that the company's board was "in the process of reviewing the detailed order, and appropriate legal advice is being sought in order to take the next steps as required".

"All the appropriate steps will be actioned as necessary, in order to ensure that the interest of the company and all its valuable shareholders is kept at the forefront," he said adding, with a singular focus on enhancing the shareholder value year after year, the board has continued to guide the management towards its strategic goals and priorities for the future.

Gopalan also added that the board recognises the significant contribution made by Chandra as the founder of the company and the growth and value generation-centric leadership showcased by Goenka.