The future of Zee and its promoters might hinge on what happens today at crucial hearings before the Securities Appellate Tribunal (SAT) and the National Company Law Tribunal (NCLT).
In the SAT hearing, Essel group Chairman Subhash Chandra and Zee Entertainment Enterprises’ MD and CEO Punit Goenka will contest the SEBI (Securities and Exchange Board of India) interim order, which restricts them from serving as directors or key managerial personnel in any listed company. The NCLT will be hearing the matter of the Zee-Sony merger.
“A positive outcome for Zee at today’s hearing would be the NCLT agreeing to proceed with the matter uninfluenced by the orders passed by the SEBI, including the order barring Subhash Chandra and Punit Goenka from being directors or KMP in any listed company or subsidiary of a listed company. Interestingly, the SAT will hear appeals filed by Chandra and Goenka against the SEBI debarment order on the same day. It needs to be seen whether the hearing before SAT will have any impact on the NCLT hearing,” said Pradyuman Dubey, Partner, DSK Legal.
What are the potential outcomes of the hearing?
“In my understanding, as this is a limited appeal against the interim order suspending the Goenkas’ directorship in any company while the investigation is underway, one potential outcome could be that the appeal is allowed, in which case, the suspension will be lifted until the conclusion of the investigation by the SEBI,” explained Shashank Agarwal, Advocate, Delhi HC
According to Agarwal, in the event the appeal is dismissed, then it’s likely that a further appeal will be filed before the Supreme Court.
Explaining the charges, Prateek Lakra, Founding Partner, Clergy & Wisemen, said, “ According to SEBI, Zee had prima facie violated regulation 7 (2) (b) of the PIT (Prohibition of Insider Trading) regulations, and accordingly imposed the suspension on them. The company offered to settle the pending proceedings without admitting to or denying the findings.’’
Since April, a series of developments have unfolded in the fraud case surrounding Shirpur Refinery and its connection to the Goenkas. In April, SEBI issued an interim order, barring Subhash Chandra and Punit Goenka from key positions in any listed company. This order was a result of the ongoing investigation into the role of Zee group entities in the diversion of funds from Shirpur Refinery. Subsequently, Punit Chandra and Goenka challenged the SEBI order at the SAT, seeking relief.
On the other hand, over the past two months, the NCLT has been closely examining the legality and feasibility of the proposed merger between Zee Entertainment Enterprises and Sony Pictures Networks India, as well as its impact on the industry and stakeholders.The NCLT hearing on today will focus on the legal aspects and feasibility of the proposed merger between Zee Entertainment Enterprises and Sony Pictures Networks India.