The Securities Appellate Tribunal (SAT) will hear on June 26 the plea of Zee Entertainment Enterprises Limited Chairman emeritus Subhash Chandra and his son and MD Punit Goenka to set aside the Securities & Exchange Board of India (Sebi) interim order barring them from directorships in listed entities.
On June 12, SEBI passed an interim order barring Subhash Chandra and his son Punit Goenka from holding directorships or managerial positions in a listed company. On June 13, Chandra and Goenka challenged the SEBI interim order before the SAT.
Appearing for Goenka, senior counsel Janak Dwarkadas argued that the petitioners have appealed against an ex-parte order, where the capital markets regulator has said that it is ‘curious’ but has not ‘reached any conclusion’.
“Sebi’s argument is that there are layered transactions, but some of the entities that they have mentioned are totally unconnected entities and not even part of the group,” argued Dwarkadas. “They have not cared to go to the websites of some of these companies to see what these companies do.”
The counsel for the petitioner further argued that PAN India Ltd. and Pen were mistaken as the same company by the Sebi.
“The company had paid over Rs 71 crore to Pen India Limited for the rights to show the movie RRR,” argued Dwarkadas.
The tribunal had last week posted the matter for final disposal on June 19.
While hearing the counsels for Chandra, Goenka, and SEBI, the tribunal stated that passing an interim order at this stage would be virtually allowing the appeals.
The bench of Presiding Officer Justice Tarun Agarwala and Technical Member Meera Swarup had asked SEBI to file a reply on or before 2 p.m. on June 17. Rejoinder, if any, was to be filed on or before June 19, 2023.
In its affidavit to the SAT, the SEBI stated that ZEEL chairman-emeritus Subhash Chandra and MD Punit Goenka are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons.
Last week, ZEEL had also written to Sebi, stating that “continuous and repetitive” inquiries into the same cause of action damage the company and shareholders. It added that the inquiries might also have an effect on the company’s merger process with Sony Pictures Networks India (SPNI).
Sebi has already given its no-objection certificate to the merger scheme between ZEEL and SPNI. As part of the merger deal, Sony Pictures Entertainment, the parent company of SPNI, will also infuse $1.57 billion into the merged entity.
In December 2021, SPNI and ZEEL signed definitive agreements to merge their assets. The merger will create a media and broadcasting behemoth worth $10 billion.
As part of the deal, Sony Pictures Entertainment (SPE) will indirectly hold a majority of 50.86% of the combined company, the promoters of ZEEL will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake.
The merger has been approved by BSE and NSE. The Competition Commission of India (CCI) has also given conditional approval to the merger. To address possible anti-competition concerns arising out of their proposed mega-merger deal, ZEEL has agreed to sell three Hindi channels: Big Magic, Zed Action, and Zed Classic.
