Sebi to Carry on Probe Against ZEEL and its Promoters

The Securities and Exchange Board of India (SEBI) has withdrawn a show cause notice (SCN) issued to Zee Entertainment Enterprises Ltd (ZEEL) and its promoters, Subhash Chandra and Punit Goenka. The allegations in the notice will now be part of the market regulator's ongoing investigation into the two executives.

According to Sebi's new regulation, the information of the SCN issued by the adjudicating officer to ZEEL promoters on July 6, 2022, would be included in the SCN issued for the current situation.

The regulator also rejected settlement proposals made by ZEEL and Punit Goenka on September 2, 2022. These applications were related to the SCN, which involved the alleged siphoning of monies from ZEEL to other promotional firms.

Sebi dismissed the media and entertainment company and Goenka's settlement proposals during adjudication hearings on April 18, 2023.

The agency opted to take action against ZEEL and the father-son duo under Section 11B of the Sebi Act of 1992, which allows it to issue notices and charge penalties.

According to Sebi's ruling, the SCN's contents, including the examination report and all relied-upon documents, will be included in the ZEEL case's further investigation report.

The Sebi has begun adjudication procedures against ZEEL for purported violations of listing obligations and disclosure requirements, as well as Chandra and Goenka for alleged shortcomings in corporate governance standards.

Initially, Sebi nominated Parag Basu as the adjudicating officer (AO) in the case. After a reassignment due to the transfer of designated AOs, Amit Kapoor was appointed as the AO on December 27, 2024.

"The panel of full-time Sebi members rejected the settlement petitions and submitted the subject for further examination. Following the investigation, the Competent Authority decided to move against the Noticees under Section 11B of the Sebi Act of 1992," the regulator stated in a three-page order."The claims in AO's SCN dated July 6, 2022 are to be combined with the conclusions of Sebi's subsequent inquiry into the subject. Accordingly, the content of the AO's SCN dated July 6, 2022, including the examination report and other relied-upon documents, will be treated as an integral component of Sebi's further investigation report in the subject of ZEEL," it stated.

The dispute concerns a letter of comfort (LoC) granted by ZEEL promoters to Yes Bank for a ₹200 crore loan extended to Essel Green Mobility. Yes Bank took over ZEEL's ₹200 crore fixed deposit after seven Essel Group entities failed to repay their loans.

The Essel Group claimed to reimburse ZEEL for ₹ 200 crore. However, Sebi said that the monies were funneled through ZEEL, its subsidiaries, and other listed Essel Group firms.