MUMBAI: The Securities Appellate Tribunal (SAT) on Monday said that it would hear plea of Zee Entertainment Enterprises managing director and chief executive Punit Goenka and Essel Group chairman Subhash Chandra challenging the interim order of the Securities and Exchange Board of India (Sebi) that bars them from holding any key positions in any listed company.
Senior Advocate Janak Dwarkadas appearing on behalf of Goenka asked for a stay on Sebi’s order and said that the regulator has no evidence beyond bank statements to prove allegations of round-tripping of funds, and it cannot pass ex parte order. There is also no urgency to pass such an order as there is no market manipulation involved. It did not even provide Chandra and Goenka with an opportunity to be heard, he added.
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.
The tribunal had asked Sebi to file a reply in the matter before the appellant before 2 pm on June 18.
The market regulator in its affidavit to SAT called for urgent action against the promoters in the alleged fund diversion case to safeguard the management, investors and other stakeholders. In the affidavit, Sebi alleged that promoters created a facade through sham entries to misrepresent investors and the regulator about the repayment of Rs 200 crore to ZEEL by seven related parties.
The regulator pointed out that the applications made by Chandra and Goenka on July 6, 2022, that there was no urgency and that the same issue is the subject matter of the show cause notice dated July 6, 2022, is completely false and misleading.
Sebi further stated that “not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings.” Sebi also submitted that the appellants had not produced any material to indicate they had suffered any prejudice by not getting a personal hearing before the interim order was passed. The regulator said it was willing to give an immediate hearing for the appellants “as early as required”.