Mumbai: The Securities Appellate Tribunal (SAT) on Wednesday sharply questioned the Securities and Exchange Board of India (SEBI) over key aspects of its recent order against Zee Entertainment Enterprises Ltd (ZEEL), particularly the rationale behind imposing a two-month market access ban on the company while reserving its interim order on Zee’s plea for relief.
During the hearing, the Tribunal repeatedly sought clarification from SEBI’s counsel on the basis for debarring the company from accessing the securities market for 60 days. The Bench questioned what purpose such a temporary restriction would serve, asking how the situation would materially differ after the expiry of the two-month period.
The Tribunal also observed that the matter had remained pending since December 2025 and questioned the logic of preventing the company from accessing the capital markets now, only to permit it to do so after 60 days. The Bench further asked why ZEEL had been barred when the company itself had not been charged with any fraud-related violations in the order.
Another issue raised by the Tribunal related to the service of SEBI’s order. The Bench noted that although the order was signed on July 31 at 9:04 pm, it was served on the company only on August 1 at around 8 pm, raising questions over the manner in which the notice was communicated.
Zee seeks interim relief for promoter capital infusion
Appearing for ZEEL, senior advocate Ravi Kadam argued that SEBI had concluded hearings in the matter in December 2025, but the final order was signed only on July 31, 2026. He submitted that the order was made public shortly after it was signed, while the company formally received it only the following evening.
Kadam urged the Tribunal to keep the operation of SEBI’s order in abeyance until the completion of resolutions approved by shareholders at the company’s extraordinary general meeting (EGM) held on July 31. These resolutions include the preferential issue of warrants to the promoter group, which is intended to infuse fresh capital into the company.
He also requested that the statutory 14-day timeline for completing the preferential allotment be recalculated from the date of the Tribunal’s interim order, arguing that failure to do so would cause irreversible prejudice to the company.
According to Kadam, the pricing of the preferential warrants is linked to prevailing market prices. A delay of two months could result in a fresh pricing calculation at lower market valuations, potentially reducing the premium currently being offered by the promoters. He further emphasised that shareholders had approved the resolutions by an overwhelming majority.
Promoters argue shareholders would benefit
Counsel appearing for Zee MD and CEO Punit Goenka submitted that the promoters are bringing in ₹3,143 crore into the company through the proposed warrant issue in the interest of the company’s long-term growth.
The counsel argued that the promoters are subscribing to the warrants at a premium and that the capital infusion would benefit the company’s broader shareholder base, with approximately 96% of shareholders expected to gain from the additional growth capital.
Echoing the Tribunal’s concerns over the 60-day market restriction, the counsel argued that the SEBI order had already led to a decline in Zee’s share price, adversely affecting shareholders. He questioned whose interests were being protected if the regulatory action itself had eroded shareholder value.
Interim order reserved
After hearing arguments from both sides, the Tribunal reserved its interim order on Zee’s plea for relief.
The Bench also directed both parties to file their replies within six weeks as proceedings in the matter continue.
The hearing comes less than two weeks after SEBI passed its final order against ZEEL, founder Subhash Chandra and Managing Director Punit Goenka. The regulator barred Chandra and Goenka from accessing the securities market for one year and prohibited ZEEL from accessing the market for two months, while also imposing monetary penalties in connection with governance lapses relating to the use of company assets.
The outcome of the Tribunal’s interim ruling is expected to be closely watched as it could determine whether Zee is able to proceed with its proposed ₹3,143-crore promoter-led capital infusion within the existing regulatory timeline.
