The Securities Appellate Tribunal (SAT) on June 26 deferred hearing the case involving Subhash Chandra, chairman of Essel Group, and Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd (ZEEL), creating uncertainty around the ZEEL-Sony merger.
Sandeep Bajaj, managing partner, PSL Advocates & Solicitors, explained the outcomes of today’s proceedings: “While in the previous hearing on June 19 no interim relief had been given by the SAT with respect to the order of the Securities and Exchange Board of India (SEBI) whereby Essel Group chairman Chandra, his son and Goenka have been barred from holding the position of director or any key managerial positions in any listed company, a lot is dependent on the outcome of the hearing before the SAT which is due tomorrow.”
One of the said matters at stake is the potential merger of ZEEL with Sony Pictures Networks India, which has been in discussions for around a year now.
“The anticipation of the outcome of the said hearing is surely a risk bearer for the merger of Zee with Sony,” Bajaj added.
There could be other implications too, said Pratyush Miglani, managing partner, MVAC Advocates & Consultants.
“Legal proceedings would likely continue, and the outcome could impact ZEEL’s stock price, ability to attract investments and even ongoing merger plans with Sony Pictures Networks India. Until the official order is disclosed, one can only speculate as to whether SEBI has been directed to present a better affidavit,” Miglani explained.
Over the past months, significant developments have emerged in the case of alleged fraud. In April, SEBI issued an interim order prohibiting Chandra and Goenka from holding key positions in listed companies. This order came in response to the ongoing investigation into the alleged involvement of Zee group entities in diverting funds from Shirpur Gold Refinery, of which Chandra was chairman and promoter. Chandra and Goenka appealed the SEBI order at the SAT for relief.