SAT reserves order on Promoter’s appeal in fund diversion case

The Securities Court of Appeal (SAT) on Tuesday booked its order on an appeal by Essel Group Chairman Emeritus Subhash Chandra and Entertainment Enterprises (ZEEL) Managing Director and Chief Executive Officer (MD and CEO) Punit Goenka in the money transfer case.

The Securities and Exchange Board of India (Sebi) banned ZEEL promoters from holding any key management position or director role in a unilateral temporary order issued on June 12.

During arguments on Tuesday, Sebi’s lawyer presented that the materials collected by the market in the past four months indicated alleged misappropriation of funds and showed that further investigations are already under way.

He added, “Given the seriousness of the matter, it was not unjustified for a boy to raise such extraordinary accusations.”

The lawyer said that Zell did not provide any response or justification to the claim of the parties involved in the circulation of funds.

The lawyer representing Goenka argued that while Sebi had issued the interim injunction against them, no directive had been issued against Yes Bank for allocating a fixed deposit of Rs 200 crore without ZEEL’s approval.

He added that the information on fixed deposits of Rs 200 crore was in the public domain and bank statements for remittances were not required by SEBI until after several years of transactions.

He said investigations found no active wrongdoing about the promoter’s role or evidence that the transactions were bogus. He reiterated that they did not have an opportunity for a personal hearing before the temporary order was issued.

Earlier on Monday, the court refused to register the additional testimony given by Sippy in the matter after an objection from ZEEL promoters.

The court is expected to issue its ruling soon on whether the ban on Chandra and Goenka from holding key positions in listed companies can be lifted until the regulator issues a final order in the matter.

The development could be key to a merger between media giants ZEEL and Sony Pictures Network India. The National Company Law Tribunal (NCLT) will then hear the merger-related matter on July 6.

First published: June 27, 2023 | 6:38 p.m ist