India’s market regulator has imposed a one-year ban on former Zee Entertainment chiefs Subhash Chandra and Punit Goenka, holding them responsible for the unauthorised use of company assets in a transaction that benefited promoter-linked entities.
In its order issued on Friday, the Securities and Exchange Board of India (SEBI) barred Chandra, the former chairman and non-executive director of Zee Entertainment Enterprises Ltd (ZEEL), along with former managing director and chief executive officer Punit Goenka, from participating in the securities market for twelve months. Zee Entertainment itself has been prohibited from accessing the market for two months.
The action stems from a controversial arrangement involving a parcel of land owned by ZEEL in Hyderabad. According to SEBI, the property was used as collateral to secure loans amounting to ₹726 crore obtained by four promoter-associated companies from Indiabulls Housing Finance Ltd. Zee was neither a borrower in these transactions nor a beneficiary of the loan proceeds.
The regulator examined whether the company’s asset had been diverted through a scheme designed to support entities connected to the promoter family. After reviewing the records, SEBI concluded that the Hyderabad land had been offered as security without approval from the company’s board, audit committee or any authorised corporate body.
The order states that both Chandra and Goenka either participated in or bore responsibility for the arrangement, which exposed company assets to financial risk without the knowledge or consent of the appropriate decision-making bodies.
SEBI observed that the conduct of the former executives failed to meet the standards of care, transparency and integrity expected from directors of a listed company. According to the regulator, the actions were not carried out in the best interests of Zee Entertainment or its shareholders.
The controversy traces back to a declaration executed on December 27, 2018, after the lending institution sought additional security for loans already extended to the borrowing companies. The document identified Zee’s Hyderabad property as security for those obligations and asserted that all necessary approvals had been obtained.
Significantly, the signature appearing on the document on behalf of Zee was never alleged to be forged or fabricated during the proceedings.
Rejecting the argument that the document lacked legal significance because it was not registered, SEBI clarified that defects under property law do not erase the underlying conduct. Even if the security arrangement was ultimately unenforceable, the regulator held that the company’s assets had nevertheless been deployed in a manner that created risk and misrepresented the true state of affairs.
The order further noted that the transaction was never disclosed to shareholders, stock exchanges or even the company’s own governance committees, despite disclosure obligations under securities regulations.
SEBI held that the concealment of the arrangement amounted to a deceptive practice and described it as part of a fraudulent scheme that diverted corporate assets for the benefit of promoter-linked entities.
The former executives defended themselves by pointing out that the land was eventually released, no sale took place and the property was later sold at a profit, resulting in no direct financial loss to Zee or its investors.
The regulator, however, dismissed that line of reasoning, stressing that securities law focuses not only on financial consequences but also on transparency, governance standards and the protection of shareholder interests.
Alongside the market ban, SEBI imposed monetary penalties of ₹60 lakh on Subhash Chandra, ₹58 lakh on Punit Goenka and ₹30 lakh on Zee Entertainment. The amounts must be paid within forty-five days.
