ZEEL In Focus As SAT Questions Sebi's Credibility On Investigation Of Punit Geonka, Subhash Chandra

Zee Entertainment shares will be in focus on Friday as the Securities Appellate Tribunal (SAT) questioned Sebi's credibility in the investigation related to the company and Essel entities under which the market regulator banned Subhash Chandra and Punit Goenka from holding any key managerial positions. SAT stated that there is no certainty the investigation into Zee matter will be finished in eight months, as past records reveal that Sebi always extended it.

SAT observed after hearing the Securities Exchange Board of India's (Sebi's) counsel Darius Khambata said, "There is no certainty that these eight months won't be extended. ...past record of Sebi is that they have always extended it (investigation)," reported PTI.

In his argument, Khambata said, they waive contracts, which ZEEL had with these companies ...that's it. ...they did not mention what the services they availed, the consideration for the same... nothing. You (Goenka) are in control of these companies and you don't think you should offer an explanation. ...it is your burden to establish it," the report further added

However, Khambata also took note of the fact that ZEEL says it will not explain and it doesn't have to explain, which he cited as "critical".

In June, Sebi barred Geonka and Chandra from holding any positions of a director or a Key Managerial Personnel in any listed company or its subsidiaries until further orders. The action was taken after Sebi's investigations on Geonka and Chandra's Letter of Comfort dated September 4, 2018, towards credit facilities up to Rs 200 crore availed by a company belonging to Essel Group (Essel Green Mobility Ltd.) from Yes Bank.

It was observed that Yes Bank in July 2019 had adjusted the fixed deposit of Rs 200 crore to meet the obligations of
the following seven entities towards YBL. These associate entities were --- Pan India Infraprojects, Essel Green Mobility, Essel Corporate Resources, Essel Utilities Distribution Company, Essel Business Excellence Services, Pan India Network Infravest, and Living Entertainment Enterprises.

Sebi found out that a major portion of the Rs 200 crore inflow into ZEEL had originated from either ZEEL itself or listed companies of the Essel Group or their subsidiaries (named below), which after passing through several layers, reached the accounts of the Associate Entities from where it ultimately reached ZEEL's account. Thus, the funds had followed a circular route where funds originated from ZEEL/listed companies of Essel Group and their subsidiaries, passed through various entities including those owned or controlled by the Promoter Family and ultimately reached ZEEL.

After Sebi's June order, ZEEL had filed appeals before the Hon'ble Securities Appellate Tribunal. However, SAT in its order dated July 10, 2023, said, "We do not find any reason to interfere in the impugned order at this stage and we dispose of the appeals directing the appellants to file a reply/objection along with a stay vacating application to the ex parte ad interim order dated June 12, 2023, within two weeks.."

Following SAT's directions, ZEEL filed their written replies vide their letters dated July 24, 2023. In the meantime, SEBI had filed a Miscellaneous Application before SAT for seeking clarification with respect to the appointment of the quasi-judicial authority in the instant matter.

On July 27, SAT directed SEBI to appoint another WTM and if no WTM is available, then any authorised officer higher in grade or rank or position to the WTM would hear and decide the matter.

On Thursday, ZEEL shares ended at Rs 272.75 apiece, down by 1.11% on BSE.