In a proceeding on Monday, the Securities Appellate Tribunal (SAT) upheld an interim order issued by the Securities and Exchange Board of India (SEBI) prohibiting Subhash Chandra, Chairman of Essel Group, and Punit Goenka, CEO of Zee Entertainment Enterprises Limited (ZEEL), from holding any directorial or key managerial roles in listed companies for a year.

SEBI passed an interim order on June 12, accusing Chandra and Goenka of abusing their positions for personal financial gains. The regulator alleged that the duo alienated assets belonging to Zee Entertainment and other listed companies of the Essel Group, intending to benefit their associate entities. 

SEBI also alleged that Zee had faked the recovery of loans to cover private financing deals by its founder Chandra. The interim order was challenged by Chandra and Goenka, seeking a stay on the ban. 

They claimed that SEBI had no evidence beyond the bank statements to prove the charges and that it had acted hastily without giving them a fair hearing violating the principles of natural justice. They added that no show-cause notice was issued to them before the order was passed.

After hearing from both sides, the SAT, presided over by Justice Tarun Agarwala and Meera Swarup, dismissed their appeal to stay the effect of SEBI’s order. SAT said that SEBI had established a case against the promoters of Zee, justifying the interim order given the seriousness of the allegations. 

Moreover, the appellate tribunal also said that Chandra and Goenka had failed to explain the source and purpose of the funds involved in the transactions. Goenka and Chandra were directed to file their replies before SEBI within two weeks. SEBI was instructed to hear the matter within one week after receiving the replies and complete the subsequent investigation within six months.