The Securities Appellate Tribunal (SAT) on Thursday doubted that market regulator Securities and Exchange Board of India’s (SEBI) will conclude its investigation in the Zee Entertainment Enterprises’ (ZEEL) matter, within a stipulated time period.
SAT was hearing ZEE’s plea against SEBI’s order baring Zee Entertainment Enterprises’ Punit Goenka and Subhash Chandra from holding any key managerial positions in the company and other organisations for allegedly siphoning off funds of the firm.
“There is no certainty that these eight months won’t be extended. …past record of SEBI is that they have always extended it (investigation),” SAT observed after hearing the SEBI’s counsel Darius Khambata.
Khambata stated “…they waive contracts, which ZEEL had with these companies …that’s it. …they did not mention what are the services they availed, the consideration for the same… nothing. You (Goenka) are in control of these companies and you don’t think you should offer an explanation. …it is your burden to establish it,” as reported by PTI.
“They are not able to dislodge the interconnection, the proximity of time, the proximity of the amounts and the conduit between the three promoter companies, which clearly show the undisputed facts,” he reportedly added.
Abhishek Manu Singhvi, representing Goenka, said that ZEEL admits to the transactions and they were official transactions. He questioned that if SEBI found it suspicious then why was it kept suspended for eight months, as per the PTI report.
Singhvi further said, “Sebi’s action is ‘punitive not preventive’ what is the telling urgency to freeze me… Where is the proof? Why am I being barred at this stage before the investigation is concluded?”
Today the transactions show no loss to ZEEL nor any gain to Goenka, he said. He added, Goenka is critical for the merger as Sony, a foreign entity, wants support during the transition phase. “Goenka being in the industry for 10-15 years understands the market,” he added.
Singhvi also argued that SEBI’s order is against the public interest, considering a merger with Sony, which has been approved by the National Company Law Tribunal (NCLT).
SAT will continue to hear the matter on September 27.
SEBI on September 13, argued before SAT that it sees significant red flags in the transactions between ZEE and Essel entities.
The scheme was to circulate ZEE’s own money back into the company through entities to pay back the debt of Essel entities, the SEBI counsel claimed, adding that the transactions between Zee and Essel entities can’t be genuine or a coincidence.
What is the ZEE case
Punit Goenka, the former chief of Zee Entertainment Enterprises Ltd, moved the SAT to obtain a stay on the SEBI order barring him from holding key positions within four ZEE group firms and in the merged entity of ZEEL and Sony Pictures Networks India.
The SEBI order alleged that Goenka and his father, Subhash Chandra, former chairman of Zee Entertainment Enterprises Ltd (ZEEL), used their roles as directors and Key Managerial Personnel (KMPs) of a listed company to siphon off funds.