The Securities Appellate Tribunal (SAT) has directed the Securities and Exchange Board of India (SEBI) to submit its response within 10 days in an appeal lodged by Essel Group Chairman Subhash Chandra concerning an alleged fund diversion case. Chandra's appeal seeks a stay on SEBI's August 14, 2023 order, which implicated him in the case.
Chandra's plea for relief follows a similar grant to his son, Punit Goenka, who serves as the Managing Director and Chief Executive Officer of Zee Entertainment Enterprises (Zee), in the same case. The tribunal previously provided respite to Goenka.
The courtroom proceedings revealed arguments from both sides. SEBI's counsel contended that Chandra had exhibited reluctance to cooperate with the investigations, repeatedly requesting additional time to furnish requested documents. Despite receiving summons on January 12, Chandra had not yet submitted any of the required documents.
In rebuttal, Chandra's legal representative asserted that SEBI had failed to substantiate any of the allegations and emphasized the reputational harm incurred by Chandra due to the ongoing case. Notably, the SEBI order, issued in August 2023, restrained Chandra from holding positions in four Zee group firms, despite his resignation from Zee in 2018.
This marks the first instance of Chandra filing for relief against the aforementioned order.
SEBI's initial investigation, prompted by a Rs 200 crore Letter of Comfort (LoC) provided by Chandra to appropriate a fixed deposit with Yes Bank, implicated funds diverted from Zee and its associated entities, allegedly benefiting the promoter family.
During prior hearings related to an appeal filed by Goenka, SEBI hinted at a broader case of fund diversion. It indicated ongoing scrutiny of numerous transactions amounting to Rs 2,000 crore, along with additional LoCs issued by the father-son duo. One such LoC, valued at Rs 4,210 crore and issued by Chandra as the Chairman of Essel Group, is under SEBI's investigation.
SEBI, in its August 2023 order, committed to concluding the probe within eight months. The final order from the regulator is anticipated by mid-April.
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