The Ministry of Information and Broadcasting is closely watching the developments related to Zee Entertainment promoters Subhash Chandra and Punit Goenka who were barred from holding any directorship or key managerial positions in listed entities for a year on account of alleged fund diversion.
This comes on the back of the Securities Appellate Tribunal (SAT) dismissing the pleas of Chandra and Goenka challenging Sebi's interim order earlier this week.
According to the sources in the I&B ministry, the matter is beyond the proposed merger of ZEEL with Sony as Chandra is directly involved in running one of the largest news networks in India.
“The norms for news channel(s) in India are far more stringent than for entertainment entities. A news channel requires security clearance from the Ministry of Home Affairs to operate in India. Besides, due to the FDI cap, DPIIT is also involved. With all these complexities, the direct or indirect involvement of people running a news network in governance issues cannot be ignored,” said an official who did not want to be quoted.
However, the official added that the matter is still before various courts and any action will depend on the final outcome of the court proceedings.
On Monday, the SAT order said, "In the absence of any evidence being filed by the appellants before us, we do not find any perversity, irregularity, illegality or irrationality in the passing of the impugned order."
"We do not find any reason to interfere in the impugned order at this stage and we dispose of the appeals directing the appellants to file a reply/objection along with a stay vacating application to the ex parte ad interim order dated June 12, 2023, within two weeks from today," the order added.
Seeking a stay on the Sebi order, the counsel for Zee Entertainment Enterprises on June 19 said the market regulator had no evidence beyond the bank statements to prove the allegations of round-tripping of funds and that Sebi cannot pass an ex-parte order.
"All entities, through which Sebi alleges round-tripping, have genuine business relations with Zee," the counsel further added.
Earlier, in its reply to SAT, Sebi had alleged that Chandra and Goenka have diverted public funds to private entities, which calls for urgent action.
"In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons," Sebi said in its affidavit to SAT.