 "Sebi order 'unjustified and unwarranted', Zee Ent argues before SAT")
Dubbing the interim order by the Securities and Exchange Board of India (Sebi) “unwarranted and unjustified”, legal representatives for Zee Entertainment Enterprises (Zee) Managing Director and Chief Executive Officer (MD & CEO) Punit Goenka argued that the regulator had reached a conclusion without giving him an opportunity of a hearing.
The markets regulator, on June 12, issued an interim order debarring Essel Group chairman Subhash Chandra and his son Goenka from taking key managerial and directorship positions in any listed company.
The Securities Appellate Tribunal (SAT) will continue to hear the appeal against Sebi’s interim order on June 26. The hearing in the National Company Law Tribunal (NCLT) on the merger between Zee and Sony Pictures Network India, too, is scheduled for the same day. Legal experts said the NCLT hearing could get deferred further.
Arguing for Goenka, Senior Advocate Janak Dwarkadas said Sebi reached a conclusion in just two working days without reaching for any further information, except bank statements.
He pointed the matter of allegedly siphoning off Rs 200 crore had not been dealt with by Sebi in four years, but an interim order was issued based on prima facie evidence.
The senior counsel argued that the Zee promoters were not given even a day’s opportunity for responses or a hearing.
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On June 11, Zee submitted a response to Sebi in the related matter raising objections against YES Bank for misappropriation of fixed deposits and submitting that it had recovered money from the relevant related entities. The markets regulator issued the interim order on the following day, June 12.
Questioning Sebi’s observation that transactions between seven related parties were “bogus”, Goenka's counsel argued that dealings with two entities were reflected in the balance sheet of the company in the relevant years based on the commercial dealings.
During the hearing, which extended for more than two hours, the senior advocate pointed out “mistakes” in the names of the entities cited by Sebi, adding that the regulator had not “cared to go to the website, check promoters and who the shareholders are” of the related parties.
A day earlier, Sebi, in its affidavit to the SAT, submitted that it found overlapping entities involved in the siphoning of Shirpur’s funds and on whose account YES Bank had appropriated Zee’s fixed deposit (FD). On further investigation into bank statements and following the money trail, Sebi found glaring irregularities.
Justifying the urgent action in the matter, Sebi submitted that it was done to safeguard the management and protect investors and other stakeholders and to prevent further possible mischief of tampering with the securities market.
Sebi also submitted that the appellants had not produced any material to indicate that they have suffered any prejudice by not getting a personal hearing before the interim order was passed. The regulator said it was willing to give an immediate hearing to the appellants “as early as required”.
ZEE’s Defence
- Sebi reached a conclusion in just two working days without asking for any further information except bank statements, says ZEE’s legal representative
- Senior counsel argues that an opportunity of a hearing was not provided by Sebi to ZEE
- Sebi submitted that it found ‘glaring irregularities’ while investigating bank statements of related parties
- The markets regulator said its action aimed at protecting investors, prevent ‘possible tampering’