SAT reserves decision on Punit Goenka's appeal against Sebi order

Regulator's counsel assures court of completing part probe by November

The Securities Appellate Tribunal (SAT) on Wednesday reserved its order in an appeal filed by Punit Goenka, the promoter of Zee Entertainment Enterprises, against the market regulator’s order barring him from holding key positions in four Zee firms, including the merged entity with Sony Pictures.

In a confirmatory order issued in August, the Securities and Exchange Board of India (Sebi) stated that it would complete the investigation within eight months into the alleged siphoning of funds and money circulation through related entities.

The tribunal has allowed one week for written submissions in the matter.

Senior counsel Darius Khambata, representing Sebi, assured the court that the regulator would conclude the investigation of five transactions related to the matter by November 30. However, Sebi indicated that more time might be necessary to complete investigations into other transactions.

Previously, SAT had questioned Sebi’s credibility and its ability to adhere to the specified timelines.

Arguing on behalf of Goenka, senior advocate Abhishek Manu Singhvi contended that the Sebi order was not in the investors’ best interest and that the regulator had failed to establish any loss to Zee Entertainment or any gain by Goenka resulting from the alleged transactions.

Singhvi characterised the Sebi order as “draconian” and suggested that the regulator’s request for eight months might merely be the start of another lengthy investigation. He added that Sebi was using a “sledgehammer to kill a fly” and argued that all transactions highlighted by Sebi were legitimate and based on valid business considerations.

In his arguments, Singhvi further stated that the board of the merged entity would predominantly consist of representatives and nominees from Sony, with the chief financial officer reporting directly to the board if necessary.

The matter revolves around a letter of comfort issued by Subhash Chandra, Goenka’s father and the former chairman of Essel Group, for the appropriation of a Rs 200 crore fixed deposit with YES Bank. Sebi had initially issued an interim order in June, prohibiting Chandra and Goenka from holding key managerial positions and directorships in all listed companies. However, SAT directed Sebi to provide the Zee promoters with an opportunity for a hearing and to issue a fresh order within two months. The confirmatory order was subsequently issued in August by the Sebi chairperson.