On Monday, the Securities Appellate Tribunal (SAT) upheld an interim order issued by the Securities and Exchange Board of India (SEBI), which prohibited Subhash Chandra, Chairman of Essel Group, and Punit Goenka, CEO of Zee Entertainment Enterprises Limited (ZEEL), from holding directorial or key managerial roles in listed companies. Chandra and Goenka had challenged SEBI's interim order, claiming it violated the principles of natural justice. They argued that no show-cause notice was issued to them before the order was passed.
During the proceedings, the SAT, presided over by Justice Tarun Agarwala and Meera Swarup, declined to stay the effect of SEBI's order. Instead, they directed Goenka and Chandra to file their replies before SEBI within two weeks, and SEBI was instructed to hear the matter within one week after receiving the replies. The SAT's detailed order is still awaited.
SEBI's interim order had alleged that Chandra and Goenka misused their positions as directors of a listed company, diverting funds for their personal benefit and transferring assets of ZEEL and other Essel Group companies to associate entities controlled by them. In response, Chandra's counsel emphasized that he held an honorary position as Chairman Emeritus and was not actively involved in Zee's operations, while Goenka's counsel challenged the procedural aspects of SEBI's order rather than the merits of the case.
SEBI, represented by Senior Advocate Darius Khambata, argued that Chandra and Goenka enjoyed the trust of the shareholders but were not allowed to continue in their key positions due to prima facie evidence of fund diversion. Following extensive hearings over two days, the SAT reserved its order and subsequently announced the verdict today.
TAGS: Securities Appellate Tribunal (SAT) interim order Securities and Exchange Board of India (SEBI) Essel Group Chairman Subhash Chandra Chief Executive Officer (CEO) Zee Entertainment Enterprises Limited (ZEEL) barring directorial key managerial posts listed companies coram Justice Tarun Agarwala Meera Swarup stay SEBI order replies show-cause notice siphoning off funds appeal violation of principles of natural justice Economic Laws Practice merits of the case procedure adopted Senior Advocate Janak Dwarkadas Advocate Somasekhar Sundaresan Senior Advocate Darius Khambata shareholders prima facie evidence reserved the matter verdict.
