The Securities Appellate Tribunal (SAT) has refused to give any interim relief to Essel Group chairman Subash Chandra and his son Punit Goenka against a Sebi order that barred them from holding the position of a director or key managerial personnel in any listed company.

The appellate tribunal has asked Sebi to file a reply within 48 hours in response to an appeal filed by Chandra and Goenka. The SAT has listed the matter for disposal on June 19.

"We think, that passing an interim order at this stage would be virtually allowing the appeals. Consequently, we think, that we should decide the appeals finally," the tribunal said in its order passed on Thursday.

Market regulator Sebi took action against Chandra and Goenka, the MD and CEO of Zee Entertainment Enterprises Ltd (ZEEL) on June 12 for allegedly siphoning off funds of ZEEL. Following this, they challenged the Sebi order at SAT.

As per their plea, there was no show cause notice issued to them and the principles of natural justice were not followed, the sources had said.

In its interim order, Sebi noted that Chandra and Goenka alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them. The case pertains to Chandra, who was also the chairman of ZEEL during the alleged violation, and Goenka having abused their position as directors or KMPs of a listed company by siphoning off funds for their benefit.

Sebi had stated that the siphoning of funds appears to be a well-planned scheme since, in some instances, the layering of transactions involved using as many as 13 entities as pass-through entities within a short period of two days only.

The order came after Sebi conducted an examination in the wake of the resignation of two independent directors — Sunil Kumar and Neharika Vohra — of ZEEL in November 2019.

They had raised concerns over several issues, including the appropriation of certain Fixed Deposit (FD) of ZEEL by Yes Bank for squaring off loans of related entities of Essel Group. Vohra alleged that bank guarantees were given to a subsidiary without approval from ZEEL's board.

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