The Securities and Exchange Board of India (Sebi) has accused Zee’s Subhash Chandra of withholding crucial information in a case involving alleged fund diversion. Senior counsel Darius Khambata informed the Securities Appellate Tribunal (SAT) that Chandra had approached the Bombay High Court on 5 March, just days before presenting arguments in the SAT on 8 March. Chandra sought to declare Sebi’s investigation as ‘illegal and void’ due to alleged bias and conflicts of interest.
Khambata emphasized that Chandra’s plea before the High Court constituted a deliberate suppression of facts and created a false impression. He criticized Chandra’s conduct, stating that a litigant cannot manipulate the legal process by presenting contradictory arguments. Khambata argued that Chandra’s application for interim relief should be denied based on these grounds alone.
Chandra’s petition to the High Court claimed that the summons issued by Sebi contained allegations that assumed his guilt without following due process. He argued that Sebi’s investigation was biased and lacked adherence to principles of natural justice. Despite receiving multiple summons from Sebi, Chandra allegedly refused to cooperate with the investigation.
Chandra filed his application in the SAT after Sebi issued an order in August 2023, prohibiting him from holding leadership positions in his company and related entities. The SAT is expected to hear his concluding arguments on 19 March. Chandra’s appeal to the SAT challenges Sebi’s confirmatory order of 14 August, which restrained him and his son Punit Goenka from holding key directorships in a listed entity in connection with the alleged fund diversion case.
The order issued by Sebi Chief Madhabi Puri Buch was strongly worded and prevented Chandra and Goenka from holding key positions in publicly traded companies until further notice. Buch clarified that the restriction also applied to any new entities formed post the proposed merger between Zee Entertainment Enterprises and Sony Pictures India (Culver Max Entertainment). Although the National Company Law Tribunal approved the merger on 10 August, Sony terminated the merger in January.
However, the SAT granted relief to Goenka against Sebi’s confirmatory order, signaling a potential legal victory for him in the ongoing dispute. The case underscores the complex legal battle between Chandra and Sebi, with each side vigorously defending its position.
The outcome of the proceedings before the SAT will have significant implications for Chandra and Goenka’s future roles in the media and entertainment industry. It will also serve as a precedent for regulatory scrutiny and corporate governance in India’s corporate landscape. As the legal saga unfolds, stakeholders closely watch the developments and await the SAT’s final verdict on the matter.
