SEBI Debars Subhash Chandra, Punit Goenka for 12 Months, Imposes ₹1.48 Crore Penalty [Read Order]

Mumbai: The Securities and Exchange Board of India (SEBI) has held Zee Entertainment Enterprises Ltd's former Chairman Subhash Chandra and former Managing Director and CEO Punit Goenka guilty of employing a 'deceptive device' and participating in a fraudulent scheme in connection with dealing in the company's securities, by unauthorisedly pledging the company's immovable property in Hyderabad to secure loans availed by promoter-linked entities.

The final order, passed by N. Murugan, Quasi-Judicial Authority, SEBI, arose out of a show cause notice issued in the matter of the unauthorised pledge of immovable property of Zee Entertainment Enterprises Ltd (ZEEL). The proceedings traced back to SEBI's interim order of June 12, 2023, during which it was noticed that ZEEL's statutory auditors had reported in the FY 2018-19 audit report that title deeds of certain immovable properties of the company were missing.

Investigation revealed that on December 27, 2018, Subhash Chandra had executed a Declaration and Acknowledgment ('2018 D&A') in favour of Indiabulls Housing Finance Limited (IHFL) on behalf of ZEEL, depositing the original title deeds of ZEEL's Hyderabad land, admeasuring 17,639.64 square metres, to create a first-ranking mortgage. This was done to secure four loans totalling Rs 726 crore availed by four Essel Group entities, whose ultimate ownership was traced to Chandra, Goenka and their family members. No prior approval of the Audit Committee, Board or shareholders of ZEEL had been obtained for the transaction, and the borrowing entities were never disclosed as related parties in the company's financial statements.

SEBI found that Chandra's declaration in Clause 18 of the 2018 D&A, that ZEEL had obtained all requisite approvals, was false, and that Goenka, despite having knowledge of the arrangement through the litigation before the Delhi High Court and the management representation letter he signed on May 27, 2019, failed to place the matter before ZEEL's Board, failed to repudiate the 2018 D&A before IHFL, and failed to recover the title deeds. On this basis, the Authority held that the conduct of the two Noticees was complementary and directed towards a common result.

The meeting of minds is accordingly established not from family relationship or designation alone, but from the complementary nature of their conduct. I therefore find that Noticee Nos. 2 and 3 acted with a common understanding and towards a common result. Noticee No. 3 executed and initiated the arrangement, while Noticee No. 2 aided and abetted him by enabling its continuation, preventing corporate scrutiny and allowing the resulting exposure to remain undisclosed.

On the finding of fraud, the order held that the concealment of the true reason for the missing title deeds from the statutory auditors and shareholders was capable of influencing investors deciding whether to purchase, retain or sell ZEEL's securities, establishing the necessary nexus with dealing in listed securities under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

Noticee No.3, then chairman of ZEEL, pledged the Hyderabad land of ZEEL with IHFL without obtaining requisite approvals. This deceptive practice resulted in the mis-utilisation and diversion of ZEEL's asset to benefit promoter-related entities. Noticee No.2, inter alia, by stating that there were no liens or encumbrances on the company's assets, is nothing but a scheme where misrepresentation and active concealment of fact despite having knowledge of such unauthorized pledge was made to investors.

SEBI further found ZEEL liable for entering into a related-party transaction without prior Audit Committee approval, in breach of Regulation 23(2) of the SEBI LODR Regulations, 2015, and for failing to disclose the fraudulent pledge as a deemed material event within 24 hours, along with subsequent developments including the Delhi High Court proceedings and the release of the title deeds on June 1, 2020, in violation of Regulations 30(1), 30(2), 30(6), 30(7) and 30(8) of the LODR Regulations. Additional violations were found in respect of governance disclosures under Schedule V of the LODR Regulations and, for Goenka, of furnishing false and misleading information to SEBI under Sections 11(2), 11C(2) and 11C(3) of the SEBI Act, 1992, through incorrect statements made during the investigation.

On penalty, the Authority noted that while there was no material on record to demonstrate a directly quantifiable investor loss or a repetitive pattern of default, the 'grave nature of the violations' and the finding of fraud warranted both monetary penalty and debarment from the securities market. 

Taking into account the mitigating fact that ZEEL had constituted an Independent Investigation Committee headed by retired Allahabad High Court judge Justice Satish Chandra to examine the company's affairs, SEBI proceeded to impose the following penalties under Sections 15A(b), 15HA and 15HB of the SEBI Act, 1992:

ZEEL was penalised Rs 30 lakh in total, comprising Rs 20 lakh for the Regulation 23(2) violation and Rs 10 lakh for governance and disclosure lapses. Punit Goenka was penalised Rs 58 lakh in total, including Rs 30 lakh under Section 15HA for fraud, while Subhash Chandra was penalised Rs 60 lakh in total, including Rs 40 lakh under Section 15HA for fraud. The aggregate penalty imposed on all three Noticees comes to Rs 1.48 crore.

In addition to the monetary penalty, SEBI directed that ZEEL be restrained from accessing the securities market for a period of two months, while Goenka and Chandra were each debarred from accessing the securities market and from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of twelve months from the date of the order. The Noticees were permitted to close out any open derivative positions within three months or at expiry, whichever is earlier, and were directed to remit the penalty amount within forty-five days.

The order was passed under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of the SEBI Act, 1992, read with Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995, and came into force with immediate effect from July 31, 2026.

Case Title: In the matter of unauthorised pledge of immovable property of Zee Entertainment Enterprises Ltd., Noticees: Zee Entertainment Enterprises Ltd., Mr. Punit Goenka and Mr. Subhash Chandra, SEBI Order No. QJA/NM/CFID/CFID-SEC4/32566/2026-27

[Read Order]