On 12-6-2023, the Securities and Exchange Board of India (‘SEBI’) in the matter of Zee Entertainment Enterprises Ltd. (‘ZEEL’) passed an interim order barring Subhash Chandra (Chairman of Essel Group) and Punit Goenka (CEO of ZEEL) to hold Directorial or Key Managerial Personnel in any listed company owned by them.


In November 2019 two independent directors resigned after raising concerns on issues including appropriation of fixed deposits of ZEEL by Yes Bank Ltd. (‘Yes Bank’) for squaring off loans of related entities of Essel Group. The Board of Directors (‘BoD’) were intimated through the resignation letter, by one the directors, that the bank guarantees have been given to a subsidiary without taking approval from the BoD and also mentioned that the operating team treated the issue very casually.

On examination it was revealed that the then Chairman of ZEEL/ Essel Group provided a ‘Letter of Comfort’ (‘LoC’) towards the credit facilities availed by certain group companies from Yes Bank.

The LoC said that:

“This is with regards to the Rs 200 Crore loan outstanding in Essel Green Mobility Ltd from Yes Bank Ltd. We will ensure that a fixed deposit of at least Rs. 200 Crore is available with Yes Bank Ltd, from any one of Essel Group of companies (including ZEEL), at all times whilst the said facility remains due and outstanding and that in the event of default under the said facility, you may appropriate the fixed deposit towards repayment of the said Facility.”

The LoC was only known to some managerial personnels and not even the BoD of the ZEEL.

Yes Bank adjusted the Fixed Deposit of Rs. 200 crores for meeting obligations of the 7 Associate Entities which were owned and controlled by family members of Subhash Chandra and Punit Goenka (‘Promoters Family’).

SEBI analyzed the bank statements and found that the funds had followed a circuitous route where funds originated from ZEEL/listed companies of Essel Group, passed through various entities owned or controlled by Promoter Family and ultimately ended up with ZEEL.


  1. ZEEL’s own funds and funds from other listed companies of Essel Group were used to give the impression that the Associate Entities had indeed returned the money they owed to ZEEL as a result of invocation of LoC given by Subhash Chandra against ZEEL’s FD of Rs.200 Crore.
  2. Further it was noted that through the modus operandi adopted, at least Rs.143.90 Crore had been transferred from ZEEL/other listed companies of Essel Group, to falsely portray repayment of due amounts to ZEEL from Associate Entities. Accordingly, it appeared that funds had been siphoned off from ZEEL and other listed companies of Essel Group.
  3. The funds diverted from ZEEL/other listed companies had ultimately benefitted the Promoter Family, as the Associate Entities which were the beneficiaries of appropriation of ZEEL’s FD of Rs.200 Crore by Yes Bank for settlement of their liabilities, are owned/controlled by the Promoter Family of ZEEL.
  4. Since Subhash Chandra had issued the concerned LoC without the knowledge or approval of the Board of Directors of ZEEL, he had a direct role in the diversion of funds of ZEEL and other listed companies of Essel Group.
  5. Mr. Punit Goenka was the MD and CEO of ZEEL at the time when the funds were moved out of ZEEL for being routed again to ZEEL through layered and circuitous transactions, for falsely portraying that ZEEL had received the dues from Associate Entities.
  6. Therefore, pushing these transactions would not have been possible without the active involvement of Subhash Chandra, as Chairman, and Punit Goenka, as MD and CEO of ZEEL.


  1. SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003- Regulation 4(1) and Regulation 4(2) (f)- prohibits manipulative, fraudulent and unfair trade practices.
  2. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015- Regulation 4(2)(f)- talks about the responsibilities of the BoD and in the instant case, there was a misrepresentation in Annual Report and false submissions to SEBI. There was also a failure to discharge the duties as directors of ZEEL for their personal benefit.


SEBI has ordered to cease Subhash Chandra and Punit Goenka in holding the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries.

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