Sebi seeks changes in order on Goenka

Securities and Exchange Board of India (Sebi) on Tuesday filed an application to modify a 10 July order of the Securities Appellate Tribunal (SAT) against Zee Entertainment Enterprises chief executive Punit Goenka.

This development follows the tribunal’s prior directive to appoint another whole-time member of Sebi to issue a final order on the matter.

On 10 July, SAT dismissed a plea by Goenka and his father Subhash Chandra, chairman of the Essel Group, challenging Sebi’s 12 June order, barring them from holding positions on the board of any listed company. Additionally, SAT had instructed Sebi to conduct a hearing for both Goenka and Chandra before passing a final order on the matter.

Appearing on behalf of Sebi, senior counsel Darius Khambata, said that Sebi’s whole-time member Ananth Narayan Gopalakrishnan will take into consideration Goenka’s objections and pass a final order.

“We have placed on record the extenuating circumstances Sebi is in, with only three whole-time members, including one (Anant Barua) whose term is coming to an end on 31 July. Others, (Ashwani Bhatia who had passed the order, and Narayan), were part of settlement proceedings in the matter. We seek the appointment of Narayan as WTM to decide on it, or allow an authorised person to pass an order on the matter,” Khambata said.

Naryan was also a part of the settlement panel pertaining to Listing Obligations and Disclosure Requirements, Regulations, 2015.

However, while refusing to decide on the application, Justice Traun Agarwala said it was not SAT’s job . “Why can’t the Sebi chairperson decide? She has the power to do it.”Responding to the bench, Khambata said that under the Sebi rules, even an executive director or chief general manager is allowed to decide matters of this nature provided no interim order is passed. “Since there is an interim order, we are only seeking a small modification in the 10 July order on appointing a WTM or authorised person who will consider the objections of the appellant (Goenka). It is allowed under Sebi (Delegation of Powers, 2019) rules and should address the bench’s apprehension that there might be a bias,” he said.

Under the Sebi (Delegation of Powers, 2019) rules, the Sebi chairperson can delegate the WTM to issue orders/directions.

In its order on 10 July, SAT had observed that the settlement application filed by the appellants was considered by a committee under the Settlement Regulations in which the WTM was a Member and therefore there is a possibility of the WTM being influenced by the discussions that took place in the settlement proceedings. “In our opinion, WTM is required to focus on the material evidence which is on the record and should not import information which is in his personal knowledge. Thus, in order to remove any kind of bias, we direct SEBI to appoint another WTM to consider the objections of the appellants,” it said in the order.

Meanwhile, following the tribunal’s order, the ZEE board has formed an interim committee of senior executives to ensure the smooth operations of the company.

The bench agreed to hear the matter further on 27 July. Live Mint