MUMBAI: In a big disappointment of ZEE Entertainment Enterprise Ltd (ZEEL), the Securities Appellate Tribunal (SAT) on Monday refused to stay the Securities and Exchange Board of India’s (Sebi) order that barred Punit Goenka, MD and CEO and Subhash Chandra, Chairman, Essel Group, from holding any key managerial position in any listed company.
The appellate tribunal has now directed Chandra and Goenka to file a response to Sebi’s order within two weeks and also asked the regulator to fix a date for the hearing within a week. “In the absence of any evidence being filed by the appellants before us, we do not find any perversity, irregularity, illegality or irrationality in passing of the impugned order,” said SAT. This order will further delay the merger of ZEEL with Sony as stakeholders would like to get more clarity and wait for the final verdict on this matter
As per the terms of the merger deal, Goenka was supposed to be the managing director and CEO of the merged entity. In a bid to clear the doubt about the future of the deal, Goenka has said that the merger should go ahead irrespective of whether he is CEO or not.
In the interim order on June 12, Sebi barred Essel Group chairman Subhash Chandra and Punit Goenka from holding the position of director or key managerial personnel in any listed company for siphoning off funds of the media firm. Both Chandra and Goenka moved SAT seeking a stay on the Sebi order, citing injustice.
During the hearing last month, ZEE had argued that the capital market regulator did not have any evidence beyond bank statements to prove allegations of round-tripping of funds and therefore it cannot pass ex parte order.
Investors turned cautious after SAT order as shares of ZEEL declined 2.4 percent to close at Rs201.50 apiece on the Bombay Stock Exchange on Monday. The board of directors of Zee Entertainment Enterprises on December 22 last year approved the merger with Sony Pictures Networks India.