SEBI Penalises ZEEL, Bars Punit Goenka and Subhash Chandra From Markets
Summarized by AI; it may make mistakes. Check important info
Summarized by AI; it may make mistakes. Check important info
The Securities and Exchange Board of India (SEBI) has barred Zee Entertainment Enterprises Ltd (ZEEL) and its top executives Punit Goenka and Subhash Chandra from the securities market after concluding that the company’s Hyderabad land was mortgaged to secure loans taken by Essel Group entities without the required corporate approvals.
In its final order, SEBI barred Goenka and Chandra from the securities market for 12 months, while ZEEL was restrained from accessing the market for two months.
SEBI imposes ₹1.48 crore penalty
The market regulator imposed a total penalty of ₹1.48 crore on the three entities.
The penalties include:
- ₹30 lakh on ZEEL
- ₹58 lakh on Punit Goenka
- ₹60 lakh on Subhash Chandra
SEBI held that the company violated provisions of the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, 2003.
The regulator directed all three entities to pay the penalties within 45 days.
Mortgage linked to Essel Group loans
According to SEBI, the case originated from ZEEL’s FY2018-19 statutory audit, which flagged missing title deeds for certain immovable properties.
The investigation found that four Essel Group companies had borrowed ₹726 crore from Indiabulls Housing Finance Ltd (IHFL) in December 2016, and that the borrowing entities were ultimately controlled by the accused and their family members through multiple corporate layers.
After the borrowers allegedly failed to maintain the required security cover, IHFL sought additional collateral in November 2018.
SEBI said that on December 27, 2018, the original title deed of ZEEL’s Hyderabad land was deposited with IHFL, creating a first-ranking mortgage over the property as additional security for the Essel Group loans.
No approval from board or shareholders
A key finding in SEBI’s order was that the mortgage was executed without prior approval from ZEEL’s Audit Committee, Board of Directors, or shareholders.
The regulator said that although ZEEL claimed the necessary approvals had been obtained, the investigation found no evidence supporting that claim.
SEBI also noted that ZEEL later informed the regulator that the company’s management and board were unaware of the mortgage and had never authorised the transaction.
The order further observed that the mortgage constituted a related-party transaction that required mandatory approvals and disclosures under applicable regulations.
