Mumbai: The Securities Appellate Tribunal (SAT) on Monday rejected an appeal by Zee Entertainment’s Punit Goenka and Zee Group chairman Subhash Chandra challenging the Securities and Exchange Board of India’s 12 June order that bars them from holding a position in the board of any listed company.
A final order, however, is awaited in the matter.
A bench led by Justice Tarun Agarwala while upholding the Sebi’s order, has given the duo two weeks to file their reply in the matter. Sebi has been asked to give a hearing to both Goenka and Chandra and thereafter directed the regulator to pass an order.
According to the market regulator’s order, the father-son duo were restrained from holding any key managerial positions in any listed entities for alleged siphoning off funds. Sebi had also stated that Subhash Chandra and Punit Goenka had allegedly abused their positions for personal financial gain. Aggrieved by the regulator’s order, the duo moved SAT.
On 27 June, the tribunal after hearing both the parties, reserved its order in the matter.
In their plea before the SAT, it was stated that the SEBI order involved a violation of the principles of natural justice. Adding that no show-cause notice was issued to the two before the SEBI order was passed. Goenka and Chandra had filed the appeal to effectively set aside the impugned order.
Essentially, Goenka had submitted that there was no such glaring ‘urgency’ which required Sebi to pass an ex-parte order granting a post-decisional hearing.
“This appeal is not on ‘merits’ but it is more to do with the procedure adopted in the current case. Given an opportunity we would have much to say about the conclusions that have been reached by Sebi in the impugned order", senior counsel Janak Dwarkadas argued while representing Goenka in the matter.
Sebi in its affidavit filed before the tribunal strongly defended its June order. While doing so, it alleged that Punit Goenka and Subhash Chndra of Zee Entertainment Enterprises Ltd were 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.
It said that SEBI is obliged to pass an ex-parte ad interim order to safeguard the interest of investors and protect the integrity of the securities market.
The regulator said that the allegations by Goenka and Chandra stating that there was no urgency in issuing the ex-parte order were ‘completely false and misleading’.
On the other hand, Subhash Chandra informed the tribunal that he did not hold any key position in any listed entities and therefore the regulator was wrong in passing such an order against him. He further pointed that Sebi’s 12 June order was erroneous, as Chandra doesn’t continue to be at the helm of affairs at ZEEL.
“Chandra had stepped down from his position on 20 August 2020. Following this he was titled the ‘Chairman Emeritus’ of ZEE. It is just a titular honorific. The question to ask would be was there a need for the order and not is there a need to set aside the order," Somasekhar Sundaresan, senior counsel for Chandra argued.