Zee, CEO Goenka approach SAT against Sebi order restricting market access

The tribunal will hear the matter on August 12 after Zee and Punit Goenka sought urgent intervention against Sebi's July 31 order over alleged fraudulent activity

Zee Entertainment Enterprises (Zee) and its chief executive officer Punit Goenka have approached the Securities Appellate Tribunal (SAT) seeking relief against a Securities and Exchange Board of India (Sebi) order restraining them from accessing the securities market.

 

Counsel appearing for the media firm and its promoter on Monday sought urgent intervention and an immediate hearing against the market regulator’s July 31 order concerning alleged fraudulent activity.

 

The tribunal has scheduled the matter for hearing on Wednesday, August 12.

 

Sebi has barred Goenka from the securities market for 12 months, while Zee has been restrained from accessing the market for two months. 

 

The regulator has also imposed a penalty of ₹58 lakh on Goenka and ₹30 lakh on Zee. Promoter Subhash Chandra has been barred for 12 months and fined ₹60 lakh.

 

The matter relates to the use of certain land owned by Zee in Hyderabad as security for loans availed by four Essel Group entities. The entities had taken four separate loans totalling ₹726 crore from Indiabulls Housing Finance (IHFL).

 

According to the order, Chandra executed a Declaration and Acknowledgement (D&A) in favour of IHFL on behalf of Zee in December 2018.

 

Sebi alleged that the benefit arising from the use of Zee’s property flowed to entities allegedly controlled by Goenka and Chandra and their family members.

 

The D&A stated that Zee had obtained all necessary permissions and approvals from the authorities to create the first-ranking mortgage. It also declared that Zee had the necessary power to secure the dues of the borrowing entities.

 

However, Sebi’s investigation found that Zee had not obtained prior approval from its Audit Committee, board of directors or shareholders for the arrangement.

 

“The borrowing entities were also not disclosed as related parties, and the use of the Hyderabad land for securing their loans was not disclosed as a relatedparty transaction in ZEEL’s financial statements,” notes the order.