The Securities Appellate Tribunal set aside the SEBI ban against Zee Entertainment Enterprises Ltd. promoter Punit Goenka in the fund diversion case.
“In view of the aforesaid, the impugned order is quashed. The ad interim order and confirmatory order restraining the appellant as the MD and CEO is set aside,” the appellate tribunal said in an order on Monday.
However, Goenka has been directed to cooperate with the Securities and Exchange Board of India investigation. If something material comes up during the investigation, then appropriate procedures can be adopted by the markets regulator.
The tribunal made it clear that the order is only prima facie and will not influence the investigation, nor will be utlised by either of the parties.
The appellate tribunal had reserved its orders on Sept. 27.
The order comes in an appeal filed by Goenka against the regulator’s confirmatory order on Aug. 14. SEBI, through the order, had prohibited Goenka as well as his father Subhash Chandra, from the boards of Zee entities, for allegedly diverting the funds of Zee Entertainment Enterprises Ltd. towards the advantage of Zee’s associate entities.
They were barred from holding key positions in ZEEL, Zee Media Corp., Zee Studios, and Zee Akaash News Pvt. The bar also extended to any entity that came out of the merger or demerger of these entities, creating a significant hurdle in Zee’s proposed merger with Sony Pictures. The order was issued after SEBI, in its interim order, alleged that the father-son duo diverted Rs 200 crore fixed deposit of Zee with Yes Bank, to service the loans of other Zee group entities.
The order also said that a detailed investigation would be undertaken into the matter within eight months.
Goenka had appealed the order on Aug. 25.
During the hearing, Goenka’s counsel argued against the ban, calling it long, disproportionate and punitive. The order, according to him, is without any evidence, as all the transactions entered by Zee were commercial in nature and don’t point towards fund diversion. However, SEBI argued against the legitimacy of transactions, citing insufficient efforts from Zee to prove the same. The time period within which these transactions were undertaken clearly indicate fund diversion, according to the markets regulator.
Apprehensions were also raised by both the court and Goenka regarding the long investigation period put forward by SEBI. Considering the distress it could have on the Zee-Sony merger, the regulator agreed to complete some part of the investigation by the end of November.