Mumbai: The Securities Appellate Tribunal (SAT) on Friday granted partial interim relief to Zee Entertainment Enterprises Ltd. (ZEEL) and its Managing Director and Chief Executive Officer Punit Goenka, allowing the company to proceed with its proposed ₹3,100-crore preferential issue of fully convertible warrants to a promoter group entity, even as the market access restrictions imposed by the Securities and Exchange Board of India (SEBI) continue to remain in force.
The order comes in appeals filed by ZEEL and Goenka challenging SEBI’s July 31, 2026 order, which barred ZEEL from accessing the securities market for two months and prohibited Goenka from accessing the market for 12 months over alleged irregularities relating to the mortgage of the company’s Hyderabad property in 2016.
While declining to stay the debarment itself, the Tribunal carved out a limited exception permitting the company to complete the preferential allotment, subject to both appellants depositing the full penalty within one week. SAT also extended the deadline for issuing the warrants by one week and permitted ZEEL to undertake mutual fund transactions for routine business requirements, while prohibiting the use of such funds for dividend payments.
A key factor that weighed with the Tribunal was the overwhelming support the fundraising proposal received from shareholders. SAT noted that 76.64% of public shareholders approved the warrant issue at the Extraordinary General Meeting held on July 31 and that around 96% of ZEEL’s shareholders are public investors.
The Tribunal also questioned SEBI’s opposition to the immediate capital raise after the market regulator acknowledged during the hearing that the proposed investment could proceed once the two-month debarment period ends.
“SEBI’s stand that the proposed investment is permissible after two months, i.e. after expiry of the debarment period, defeats logic,” the Tribunal observed, noting that apart from the impugned order, no other legal impediment had been pointed out that would prevent the investment.
SAT further held that allowing the preferential issue would serve the interests of investors rather than prejudice them.
“Keeping in view the fact that the public shareholders are about 96%, in our view further issue of fully convertible warrants by preferential warrant route will be beneficial to the public shareholders,” the Tribunal said while recording that the issue is expected to bring in nearly ₹3,100 crore for the company.
During the hearing, ZEEL argued that the shareholder-approved resolution had become legally binding under the SEBI (Issue of Capital and Disclosure Requirements) Regulations and that failure to complete the allotment within the prescribed timeline would jeopardise the capital raise. The company also contended that the SEBI order, passed on the evening of July 31 after the EGM concluded, effectively unsettled vested shareholder rights and undermined shareholder democracy.
SEBI, however, opposed interim relief, arguing that the Hyderabad property had been mortgaged to secure loans for related entities without board or shareholder approval and that Goenka had made representations to statutory auditors regarding the absence of encumbrances despite issues surrounding the title deeds. The regulator maintained that the appellants had acted contrary to shareholders’ interests and were therefore not entitled to interim protection.
The Tribunal clarified that all other issues raised in the appeals remain open for consideration at the final hearing, making it clear that the present order is confined to interim relief and does not amount to a determination on the merits of SEBI’s findings.
