The Securities Appellate Tribunal reserved its order on Tuesday in an appeal filed by Zee's Subhash Chandra and Punit Goenka against SEBI's interim order barring them from holding management and directorial positions in any listed company.
On June 12, the Securities and Exchange Board of India took action against Zee Entertainment Enterprises Ltd. Chairman Emeritus Chandra and Chief Executive Officer Goenka for allegedly misappropriating funds for the benefit of other entities promoted by them. They appealed against the interim order the next day. However, the court had refused to provide an interim relief and decided to finally dispose of the matter.
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In the previous hearing, the counsels for Goenka and Chandra questioned the necessity and urgency of passing such an order without an opportunity to be heard. They argued that the order had caused them prejudice.
However, the markets regulator said there was no prejudice in the order. Its counsel, Darius Khambata, said one cannot claim that there was prejudice when they did not use the opportunity to defend their transactions.
According to Khambata, they should prove the genuineness of each transaction entered into with related parties and cannot get away with proving just the one. The counsel said the manner in which the transaction was layered between related parties shows that the transactions were not genuine and had no commercial purpose.
Goenka's counsel, Senior Advocate Janak Dwarkadas, submitted that the onus was on the regulator to prove the genuineness of the transaction and cannot be shifted to the parties.
"According to us, the regulator has not dispensed with this burden," Dwarkadas said. "It has not proved that these transactions were without commercial purpose or consideration, which we have proved."
Therefore, the order should be set aside on account of procedural impropriety alone, he said.
The court reserved the order after listening to both sides.
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