Even as the Securities and Appellate Tribunal (SAT) set aside an order by the Securities and Exchange Board of India (SEBI) against Zee Group promoters last month, the market regulator is unlikely to give up a wider probe it is conducting against them.
Investigation reveals additional transactions
The SAT order and hearings have revealed that certain other transactions worth Rs 2,000 crore and a letter of comfort (LOC) of Rs 4,210 crore issued by the promoters are under SEBI’s scanner. It was for this reason that SEBI chief Madhabi Puri Buch had set an eight-month deadline to complete the comprehensive probe against the promoters, sources said.
In June this year, SEBI had issued an ex-parte order against the promoters barring them from holding directorship in any of the listed companies or their subsidiaries for charges relating to Rs 200 crore alleged funds diversion and siphoning. One of the reasons given by the SAT judge to set aside the order concerning Rs 200 crore funds diversion was the long time period of eight months that SEBI wanted for investigating the five transactions.
SAT's critique of SEBI's process
The other reason for SAT was that SEBI whole time member (WTM) Ashwini Bhati, who had passed the interim order, and Buch who had passed the final order, differed in their reasoning on passing of the ex-parte order against the promoters without giving them a hearing. But SEBI lawyers had argued in SAT that eight months was required to complete a wider investigation since now the regulator had found there were a large number of transactions running into Rs 2,000 crore involving companies owned, controlled or otherwise related to the promoters.
Further LoCs issued by Punit Goenka and his father has come into existence, including LoC to the tune of Rs 4,210 crore issued by one of the promoters in his capacity as the chairman of Essel Group (related to Zee Group). Therefore, the direction to complete the investigation in eight months was aimed at ensuring a comprehensive investigation in the matter.
The five transactions in question were only part of the wider investigation, which is being carried out by SEBI. SAT said in its order that its ruling last month would not affect any other investigation that SEBI intended to do against the promoters.
