SEBI bars Punit Goenka, Subhash Chandra from securities markets for a year

Mumbai: Market regulator SEBI has barred Zee Entertainment Enterprises Ltd (ZEEL) and two of its top executives, Punit Goenka and Subhash Chandra, from the securities market after finding that ZEEL’s Hyderabad land was mortgaged against loans availed by Essel Group entities without necessary corporate approvals.

In a final order issued by SEBI’s quasi‑judicial authority, ZEEL was restrained from accessing the securities market for two months, while Goenka and Chandra were barred for 12 months.

The regulator also imposed a total penalty of Rs 1.48 crore on these three entities— Rs 30 lakh on ZEEL, Rs 58 lakh on Goenka and Rs 60 lakh on Chandra. Holding that the LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015 and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 were violated, SEBI directed them to pay the penalties within 45 days.

SEBI traced the case’s inception to ZEEL’s FY2018‑19 statutory audit, which flagged missing title deeds for certain immovable properties.

The regulator’s probe found that four Essel Group companies had borrowed Rs 726 crore from Indiabulls Housing Finance Ltd (IHFL) in December 2016, with Essel Home Pvt. Ltd. as co‑borrower, and that the borrowing entities were ultimately controlled by the accused and their family members through multiple corporate layers.

The regulator noted that after the borrowers failed to maintain the security cover, IHFL issued notices in November 2018 seeking additional collateral.

SEBI order said that on December 27, 2018, a Declaration and Acknowledgement on behalf of ZEEL was executed the original title deed of the company’s Hyderabad land was deposited with IHFL to create a first-ranking mortgage over the property as additional security for the loans.

Though ZEEL argued that it had obtained all necessary corporate approvals for the mortgage, the investigation did not find any prior approval from the company’s Audit Committee, Board of Directors or shareholders.

The regulator also noted that ZEEL later informed it that the company’s management and board were unaware of the mortgage and had never authorised the transaction.

As per ZEEL’s financial statements for FY19 and FY20, the mortgage amounted to a related-party transaction requiring approvals and disclosures under the applicable regulations.

—IANS