The NSE and the BSE may have to reconsider their approvals to the Sony-Zee merger in light of a recent order by SEBI against an Essel Group entity, the exchanges told the company law tribunal on Thursday.
On April 25, the Securities and Exchange Board of India had passed an order against Shirpur Gold Refinery Ltd. This order was placed before the tribunal on the market regulator's direction with the intention of bringing to the court's notice the functioning of companies managed by the Essel Group.
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Shirpur is a listed company promoted by Jayneer Infrapower and Multiventures Pvt., a company owned by the family members of Subash Chandra, the promoter of Essel Group companies. The list of shareholders of Jayneer includes several members of the Goenka family, including Punit Goenka, chief executive officer of Zee Entertainment Enterprises Ltd.
As per the SEBI order, Shirpur diverted its assets worth over Rs 400 crore between 2019 and 2021 for the benefit of its connected entities. Around 99% of its receivables could be attributed to three companies—Altrarex Traders Pvt., Balmukh Goldjewel and Multitrading Pvt., and Magicstone Traders Pvt., which are all connected through the common directorship of Amit Goenka, son of Subash Chandra.
This amount was further advanced to other companies and ultimately reached Jayneer, the promoter of Shirpur.
Later, insolvency proceedings were initiated against Altrarex by another connected entity, Ekmart Trading Pvt., for Rs 50 crore owed by it. Although Shirpur had a claim of Rs 242 crore against Altrarex, no claim was filed by it.
This means that Shirpur will get nothing from the insolvency proceedings of Altrarex despite its claim. This, according to the regulator, is part of Shirpur's elaborate scheme to divert funds to promoter-owned entities.
SEBI has alleged abuse of insolvency law by Shirpur and its promoters, and barred them from divesting their stake in it.
The National Company Law Tribunal has now asked the exchanges whether they would be reconsidering their approvals in light of SEBI's order.
"We depend on NSE and BSE to give the go-ahead to the merger, and they have done it. In light of this order, they should review it.", the court observed.
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