The Securities Appellate Tribunal (SAT) upheld the Securities and Exchange Board of India’s (SEBI) order against Zee Entertainment’s Subhash Chandra and Punit Goenka, refusing to place an interim stay on it.

Chandra and Goenka are now expected to respond to SEBI’s interim order within two weeks.

What Happened? On Jun. 12, SEBI issued an ex-parte interim order barring Essel Group Chairman Subhash Chandra and Zee Entertainment Managing Director and CEO Punit Goenka from holding any directorial or key managerial roles in listed entities due to accusations of fund diversion.

SEBI’s counsel, Darius Khambata, argued that evidence collected over the past four months suggested alleged fund misappropriation and underscored the need for ongoing investigations.

See also: Sony-Zee Merger To Proceed Irrespective Of My Position, Asserts Punit Goenka

In contrast, Janak Dwarkadas, senior advocate representing Goenka, contended that SEBI’s action of removing the two key figures from the company infringes on their fundamental employment rights. He also highlighted the lack of any directive against Yes Bank for allegedly misappropriating a ₹200 crore fixed deposit without Zee Entertainment’s approval.

Zee Entertainment and a Sony Group subsidiary in India announced a merger in 2021 to create a $10 billion (₹82,603 crore) TV enterprise. However, this recent SEBI ban on Goenka has caused concern over potential further delays to the Sony deal.

Sony Pictures Entertainment stated in June that it takes SEBI’s order “seriously” and is closely monitoring developments that could affect its deal with Zee.

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