SAT directs SEBI to appoint another whole time member to hear ZEEL promoters

The Securities and Appellate Tribunal (SAT) has directed SEBI to appoint another whole time member (WTM) to hear the objections of Punit Goenka and Subhash Chandra, promoters of Zee Entertainment Ltd (ZEEL). In SAT's view, this was being done to 'remove bias.'

Last month, SEBI WTM Ashwani Bhatia had passed an interim order against Goenka and Chandra, which had barred them from holding directorial or key managerial positions (KMP) in any listed company or its subsidiaries. In its order on Monday, SAT observed that Bhatia was the same WTM who had passed another order in April against an entity linked to the Zee group promoters. Bhatia was also part of the committee that rejected Goenka and Chandra's settlement plea in the current matter. SAT observed that there was 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," SAT said in its order.

Further, SAT observed that even though SEBI's earlier order on Shirpur Gold did not involve Goenka and Chandra as parties, nevertheless the order had influenced Bhatia in issuing his current directives in the ZEEL matter.

"We, however, find that the WTM while passing the impugned order took into consideration the interim order dated April 25, 2023 passed in the matter of Shirpur Gold Refinery in which the appellants are not parties but this order has influenced the WTM in passing the impugned order. We find that the order passed in Shirpur Gold Refinery Ltd. was passed by the same WTM who has passed the impugned order," SAT reasoned while issuing its directives to SEBI.

SAT further said that all arguments raised by Goenka and Chandra before the tribunal will remain open to be raised before SEBI, which will be considered and appropriate orders would be passed by the WTM. "The WTM will also take into consideration the proportionality of the directions given in the impugned order vis-à-vis the alleged violation."

Principle of Proportionality is core to the legal system, which states that legality of an action should be determined depending on balance between the objective and the means and methods used as well as the consequences of the action.