Market regulator SEBI has banned Zee group’s Subhash Chandra and son Punit Goenka from the market for one year for fraudulently pledging Zee Entertainment Enterprises Ltd.’s land parcels in Hyderabad as a security for personal loans. Chandra has also been fined Rs. 60 lakh, Punit, Rs. 58 lakh and ZEEL Rs. 30 lakh for the fraudulent acts which were carried out in 2018.
SEBI’s 158-page order on July 31 said that in December 2016, four privately held entities of the group had taken four separate loans aggregating Rs. 726 crore. These companies were eventually controlled by Subhash Chandra and his family members. In November 2018, the lender asked for additional security covers for the four loans from the group’s companies. At this point, Chandra, who was the chairman of ZEEL, misused his position and authority in the company and handed over the original title deeds of the Hyderabad land parcel (held by ZEEL and not by the private companies of the group) to the lender by falsely declaring that the said action had the approval of the company’s management. This, according to SEBI, amounted to abuse of position and authority for personal benefit while risking the interest of the listed company (ZEEL) and its shareholders.
The SEBI order also said that “at no time the true nature of the said transaction was disclosed, and the whole incident was projected as a mere misplacing of the documents despite the same becoming the subject matter of litigation and arbitration, further shows the absence of good faith and intention to hide the material interest of (Chandra) from the (company’s) stakeholders”. Given these circumstances, SEBI found that Chandra and Goenka “also be visited with an appropriate period of debarment”.
