The Securities Appellate Tribunal (SAT) has dismissed an appeal by Zee Group Chairman Subhash Chandra and Zee Entertainment CEO Punit Goenka against a ban imposed by the Securities and Exchange Board of India (SEBI). The ban prevents them from holding any managerial or directorship position in listed entities for a year. The SEBI order was issued on June 12 due to alleged fund diversion.

SAT’s Decision and Deadline

SAT stated that it does not find any merit in interfering with SEBI’s order and has asked Chandra and Goenka to respond to SEBI within two weeks. This gives them an opportunity to defend themselves.

Background of the Case

SEBI’s investigation was initiated following allegations by Yes Bank regarding the appropriation of certain fixed deposits by Chandra and Goenka to settle loans of related entities of Essel Group. According to SEBI, Chandra provided a ‘Letter of Comfort’ (LoC) for credit facilities obtained by certain group companies from Yes Bank. The SEBI order revealed that the LoC was known only to a select few within the management and was not disclosed to the Zee Entertainment Enterprises Limited (ZEEL) board.

SEBI’s Findings and Ongoing Probe

The SEBI order accused Chandra and Goenka of misusing their positions as directors/key management personnel (KMPs) of a listed company for their personal gain. It stated that the funds in question originated from ZEEL and other Essel Group entities and were routed through various promoter family-owned/controlled entities before being transferred to ZEEL. These transactions were allegedly made to falsely indicate the receipt of funds.

SEBI is currently conducting a thorough investigation to uncover the complete truth behind the alleged fund diversion.

Market Reaction

Following the SAT’s decision, Zee Entertainment shares experienced a decline of 5.81% and reached a low of Rs 194.45 on the Bombay Stock Exchange (BSE). The stock has declined by 18% year-to-date.