The Securities Appellate Tribunal on Monday quashed the market regulator Sebi's order that had barred Zee Entertainment Enterprises' promoter Punit Goenka from holding key managerial posts in the company and other group firms.
While setting aside the order, the tribunal also directed Goenka to cooperate with Sebi's probe against him. If any material comes out against Goenka during the course of the investigation, then the appropriate procedure can be adopted by the regulator in accordance with the law, it added.
The order came after Goenka challenged the Sebi's confirmatory order, passed on August 14, which confirmed the directions of the regulator that had debarred ZEEL promoters -- Goenka and Subhash Chandra -- from holding any directorship or other key managerial positions in the company and other organisations, including the merged entity of ZEEL and Sony Pictures Networks India until further directions.
In a 94-page ruling on Monday, the tribunal said Sebi's order cannot be sustained and is quashed insofar as it relates to the appellant (Goenka).
"The restraint order passed by the respondent (Sebi) pursuant to the ad interim order and the confirmatory order restraining the appellant to function as a Managing Director and is set aside," it said.
While orally delivering the order, Presiding Officer Justice Tarun Agarwala said, "The appellant shall however cooperate in investigation. In the event any material comes out against the appellant during the course of the investigation, appropriate proceeds can be adopted by Sebi".
In June this year, Sebi had barred then Essel Group Chairman Subhash Chandra and Goenka from holding the position of a director or key managerial personnel in any listed company for siphoning off funds of the media firm.
Subsequently, the watchdog passed the confirmatory order in August.
The case pertains to Chandra, who was also the chairman of ZEEL, and Goenka, having allegedly abused their position as directors or Key Managerial Persons (KMPs) of a listed company for siphoning off funds for their own benefit.
Sebi had said that Chandra and Goenka alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them.
The siphoning of funds appears to be a well-planned scheme since, in some instances, the layering of transactions involved using as many as 13 entities as pass-through entities within a short period of two days only, it had said.
