Sebi Consolidates Proceedings Against ZEEL, Punit Goenka, and Subhash Chandra Over Fund Diversion Allegations

The Securities and Exchange Board of India (Sebi) on Thursday consolidated its proceedings against Zee Entertainment Enterprises Ltd (ZEEL), its CEO Punit Goenka, and former chairman Subhash Chandra. The allegations involve fund diversion and violations of disclosure regulations.

In its order dated January 2, Sebi stated that it will now investigate these allegations collectively.

Background of the Case

Sebi accused ZEEL of failing to comply with provisions of the Sebi (Listing Obligations and Disclosure Requirements) Regulations (LODR) and alleged that Chandra and Goenka violated corporate governance norms. A show-cause notice was issued on July 6, 2022, questioning their actions and seeking justification for why penalties should not be imposed.

In response, ZEEL and Goenka submitted settlement applications, which Sebi rejected in April 2023, referring the matter for further investigation.

In August 2023, Sebi issued an interim order barring Chandra and Goenka from holding key positions in any listed company, accusing them of diverting assets from Subhash Chandra-owned Essel Group firms. The Securities Appellate Tribunal later set aside this order but allowed Sebi to continue its investigation.

Consolidation of Proceedings

Initially, the fund diversion case and the LODR violations were separate probes. However, Sebi concluded that the findings from the LODR investigation could be incorporated into the fund diversion case.

“The allegations in the show-cause notice of July 6, 2022, issued by the adjudicating officer, are to be subsumed with the findings of the further investigation in the fund diversion matter,” Sebi’s order stated.

As a result, the LODR proceedings against ZEEL, Chandra, and Goenka were dropped. Experts believe this move is aimed at avoiding redundant proceedings.