Subhash Chandra 'not cooperating' with investigation, says Sebi

The Securities Appellate Tribunal (SAT) on Monday gave the market regulator 10 days to file a reply in an appeal filed by Essel Group Chairman Subhash Chandra in the alleged fund diversion case.

Chandra has sought a stay on an order by the Securities and Exchange Board of India (Sebi) issued on August 14, 2023. The tribunal had earlier granted relief to Punit Goenka, Chandra's son and the managing director and chief executive officer of Zee Entertainment Enterprises (Zee), in the same case.

The counsel arguing for Sebi submitted to the court that Chandra is "not cooperating" with the investigations and has continually sought more time to submit the requested documents. The market regulator had sent summons on January 12. The counsel said that till now, Chandra had not submitted any documents.

On behalf of Chandra, the counsel argued that none of the allegations by Sebi had been proved and that the case was causing damage to the reputation. He further submitted that the Sebi order barred Chandra from holding positions in four Zee group firms, while Chandra had resigned from Zee in 2018.

This is the first time Chandra has filed for relief in the said order.

In the order, Sebi had alleged that funds diverted from Zee and associate entities benefitted the promoter family.

Sebi's investigation was triggered by a letter of comfort (LoC) of Rs 200 crore granted by Chandra for appropriating a fixed deposit with Yes Bank.

In earlier submissions to the tribunal during arguments on an appeal filed by Goenka, Sebi had hinted at a deeper case of fund siphoning. Sebi had submitted that there were a large number of transactions running into Rs 2,000 crore, which were under probe. Further, additional LoCs issued by the father-son duo were under the scanner, including one to the tune of Rs 4,210 crore issued by Chandra in his capacity as the chairman of Essel Group.

Sebi, in its August 2023 order, had said that it would complete the probe within eight months. The regulator is expected to issue the final order by mid-April.

The tribunal will hear the matter next on March 8.