Subhash Chandra, Punit Goenka Denied Stay Against SEBI Order

The Securities Appellate Tribunal on Thursday refused to stay an interim order of the Securities and Exchange Board of India, which barred Essel Group's Subhash Chandra and Zee Entertainment Enterprises Ltd.'s Punit Goenka from holding directorial positions in any listed company.

"Passing an interim order at this stage would virtually mean allowing the appeal," the SAT said. SEBI has been given 48 hours to file its reply with the tribunal. The matter will be finally heard and disposed of on Monday.

Earlier this week, the markets regulator said in an interim order that both Chandra and Goenka had abused their positions as directors and key managerial personnel of a listed company to syphon funds for their own benefit.

Goenka and Chandra had approached the appellate tribunal against this order on Tuesday.

Arguing for Goenka before the SAT, Senior Advocate Janak Dwarkadas opposed SEBI's conclusions. The order gives rise to a post-decisional hearing situation, in violation of Goenka's right to natural justice. It's not even a show cause notice, and it violates the right to reputation of the party—a right zealously upheld by the apex court of the country, Dwarkadas said.

SEBI had not undertaken the investigation it's claiming to have done; it's a sham, he said. According to him, it's evident from the fund trail that the regulator has provided. The company with which the trail starts is a company with whom Zee has had business relations since 2018. This is even represented in Zee's balance sheets. The regulator has jumped to conclusions without proper investigation, he said.

SEBI's interim order would also have the effect of derailing Zee's merger with Culver Max Entertainment Pvt. (Sony Pictures), Dwarkadas said. As the hearing [for the merger] is scheduled for Friday [June 16], interim relief is necessary to go ahead with the merger, he said.

Countering these arguments on SEBI's behalf, Senior Advocate Darius Khambata submitted that the allegations are baseless. "They have not yet proved how the investigation is a sham," he said.

After hearing both sides, the SAT refused to grant any interim relief. It allowed the parties to seek an adjournment for the merger hearing.