SEBI finds ZEEL hid missing title deeds and undisclosed promoter loans

SEBI examined whether this action violated regulations on fraudulent trade practices, listing obligations, and disclosure requirements.

Who it concerns: Zee Entertainment Enterprises Ltd. (ZEEL), Mr. Punit Goenka, and Mr. Subhash Chandra.

What SEBI found or ordered

• SEBI investigated the deposit of ZEEL's title deeds for Hyderabad land (17,639.64 sq. meters) with Indiabulls Housing Finance Limited (IHFL) on December 27, 2018.
• The property was pledged as security for four loans aggregating to ₹726 crores taken by Essel Group entities.
• SEBI alleged that ZEEL did not obtain prior approval from its Audit Committee, Board of Directors, or shareholders for this transaction.
• SEBI alleged that ZEEL failed to disclose the creation of security, related-party nature of the transaction, and subsequent Delhi High Court litigation to stock exchanges as required by SEBI LODR Regulations.
• SEBI alleged that ZEEL failed to disclose the resulting contingent liability in its financial statements for FY 2018-19, FY 2019-20, and FY 2020-21.
• SEBI alleged that Mr. Punit Goenka, as MD/CEO, signed incorrect management representation letters and CEO-CFO certifications despite the undisclosed encumbrance and litigation.

Also in the document

• The order notes that the statutory auditors (Deloitte) reported in May 2019 that the original title deeds for the Hyderabad property were missing from ZEEL's possession.
• The Delhi High Court granted interim protection to IHFL in May 2019, and respondents undertook not to dispose of the property, but SEBI alleges these developments were not disclosed by ZEEL.
• The investigation traced the ultimate control of the borrowing entities to Ms. Sushila Goenka, Mr. Subhash Chandra, and their family members.