Punit Goenka is set to submit a second appeal with the Securities Appellate Tribunal (SAT) questioning the Securities Exchange Board of India’s (SEBI’s) decision to oust him as MD and CEO of Zee Entertainment Enterprises (ZEEL) even as the investigation into the allegations against him was yet to be concluded.

An industry source told businessline that SEBI’s order is unprecedented. “There are ongoing investigations against a number of companies, but SEBI has not asked the respective MD and CEOs to sit out. Goenka is likely to argue that his ouster was premature,” the source said. 

In the order released on August 14, SEBI confirmed that Goenka along with his father Subhash Chandra shall not hold the position of a Director or a KMP in ZEEL or any of its subsidiaries, while SEBI completes its investigation on the matter. SEBI has given itself eight months from the issuance of the order to complete its investigation, and Goenka will not be allowed to lead the company in the interim. SEBI had argued that if Goenka is in a position of influence, the investigation against him and Chandra will not be fair and incomplete. 

As of now, Goenka has been barred from his position at Zee for more than two months. Zee’s board of directors replaced Punit Goenka with an interim committee of senior executives to ensure smoother operations on July 17. Later, Punit Goenka resigned from Zee’s board of directors. 

Original terms of merger

According to the original terms of the merger, between Zee and Sony, Punit Goenka was set to lead the merged media entity, which is likely to be the largest or the second largest media company in India. The Zee Sony merger has already been delayed for more than two years due because of legal troubles. If after eight months, SEBI concludes that Goenka had, in fact, misappropriated funds, he is likely to be permanently barred from holding the top executive position at Zee. 

It is still unclear whether Sony will look to appoint a new MD and CEO for the Zee-Sony merged entity from its own internal bench. NP Singh (MD and CEO of Sony) could be considered, as there is a dearth of executives, of Goenka’s stature, who could lead such a large enterprise. Sources familiar with both the companies certainly indicate that Sony is considering an internal appointment. On the flip side, other executives argue that Singh does not have experience with Zee’s movie business as well as content creation for the regional markets, which is what India’s first homegrown media empire is bringing to the table with this merger. 

Other sources, however, said that it is unlikely that a replacement for Goenka will be announced, given the legal uncertainty over the SEBI order.