Mumbai: Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises Ltd, is not cooperating in an investigation into alleged diversion of funds from the media company, the Securities and Exchange Board of India (Sebi) has informed the Securities Appellate Tribunal (SAT) hearing the matter.
Chandra’s legal counsel has, however, contested these allegations.
Representing Sebi, senior counsel Darius Khambata said Chandra’s claims of cooperation were baseless and pointed out that the market regulator’s efforts to engage with him, including by sending summons and requesting documents, have only been met with promises of delayed responses.
“We will put this on record that, in fact, he (Chandra) has ‘not been co-operating’. Sebi has been writing to him, giving him summons and seeking information documents. To which Chandra has been saying that he will take 6-8 weeks,” said Khambata.
“Suddenly he has woken up and filed an application much after the order was passed in August 2023. We would want to place this on record by filing an affidavit.”
In response, Shyam Mehta, Chandra’s counsel, referred to a detailed October ruling by SAT, which, he said, addressed the issues at hand, and sought a stay on Sebi’s August order.
“The order was prejudicial not only to my reputation but also on the companies with which I am associated. Virtually I am being treated as a criminal,” Chandra said in his plea against Sebi’s August order.
On 14 August 2023, Sebi had issued an order against Subhash Chandra and Punit Goenka for alleged fund diversion, and barred them from holding any key managerial positions in listed entities. Sebi mandated the completion of its investigation within eight months, setting an April deadline.
On 31 October, Punit Goenka was reinstated as the managing director and chief executive of Zee Entertainment after SAT overturned a ban imposed by the markets regulator for allegedly siphoning off company funds.
Recent media reports, however, say Sebi has unearthed a financial discrepancy exceeding $240 million, or around ₹2,000 crore, in the accounts of Zee Entertainment Enterprises. This amount is nearly 10 times more than what Sebi investigators had initially estimated.
SAT has given 10 days for Sebi to file a reply in the matter and posted the matter for further hearing on 8 March.
At today’s hearing, Khambata noted that Chandra’s delayed application lacked urgency. “There was no utter prejudice or any urgency to file the application. He himself said that he resigned as the chairman of Zee in November 2019, and that he was not associated with any Zee group company or any listed company. The petition is not maintainable.”
Mehta countered by emphasizing the prejudicial nature of allegations of fraud and fund misappropriation.
“I will bring it on record that this order is being used by different authorities in different proceedings to say I am a criminal and have indulged in misappropriation of funds,” Mehta said on behalf of Chandra.
Sebi’s investigation into fund diversions at Zee essentially resulted in the collapse of Sony India’s proposed $10-billion merger with the Indian company, primarily over objections to Goenka helming the new entity.
After the deal fell through, following two years of negotiations, Chandra wrote to finance minister Nirmala Sitharaman alleging that Sebi’s moves were an attempt to “scuttle” the merger.