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SAT doubts if Sebi will conclude probe into Goenka case on time

The Securities Appellate Tribunal has raised concerns about the credibility of Securities and Exchange Board of India (Sebi) regarding the time taken to complete investigations, particularly in relation to Zee promoter Punit Goenka’s case.

“Your credibility to complete investigations within a stipulated period is not there,” said the SAT bench led by Justice Tarun Agarwala. “There is no certainty that these eight months won’t be extended…Past record of Sebi is that they have always extended it. This has happened in several cases. The recent one being the Adani-Hindenburg case.”

SAT’s observation follows the confirmation order by Sebi chief Madhabi Puri Buch, prohibiting Goenka from holding important managerial roles in ZEE group companies. Sebi also confirmed that it will be completing the investigation within eight months.

Goenka and Sebi have been locked in a legal battle over an alleged fund diversion case.

Appearing for Sebi, senior counsel Darius Khambata said that the alleged fund diversion took place when Goenka was in a key managerial position.

“They are not being able to dislodge the interconnection, the proximity of time, proximity of amounts and the conduit between the three promoter companies which clearly show the undisputed facts,” Khambata argued on Thursday.

With regard to the then-disputed ZEE-Sony merger, a critical clause for the approval was that Goenka was to be the managing director and chief executive of the merged entity for a period of five years. Goenka’s claims that he had no role in the merger, cannot be a valid answer, Khambata said. “The fact is shareholders voted for the merger, and not Goenka.”

Abhishek Manu Singhvi, the senior counsel appearing for Goenka, however argued that Sebi’s action by nature is punitive and not preventive. “What is the telling urgency to freeze Goenka? Where is the proof? Why am I being barred at this stage before the investigation is concluded? Today the transactions showed no loss to ZEE or gain to Goenka. Why should my client be liable for misgovernance by intermediaries.”

Defending Goenka’s role in the ZEE Sony merger Singhvi said Goenka is critical for the merger since Sony, which is a foreign entity, wants support during its transition phase.

“Goenka has been in the industry for 10-15 years and understands the market. ZEE has the expertise in India and has been operating for 30 years. Sony has come to India and wants to expand so it wants some hand-holding and they have selected Goenka.” the senior counsel concluded.

NCLT in its order on August 10 approved Zee’s merger with Sony, which is one of the biggest mergers in the media and entertainment industry in the country.

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Updated: 15 Sep 2023, 12:07 AM IST

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