The Securities and Exchange Board of India (Sebi) has barred Zee Entertainment Enterprises (ZEEL) former managing director and chief executive officer Punit Goenka, and Essel Group chairman Subhash Chandra from accessing the securities market for one year after holding them guilty of fraud in connection with the unauthorised pledge of the company’s Hyderabad property to secure loans raised by promoter-linked entities.
In its 150-page final order dated July 31, 2026, Sebi also restrained Zee Entertainment from accessing the securities market for two months. The regulator imposed monetary penalties of Rs 58 lakh on Goenka, Rs 60 lakh on Chandra, and Rs 30 lakh on ZEEL, taking the total penalty to Rs 1.48 crore. The amounts have to be paid within 45 days.
Fraud Finding Against Promoters
Sebi concluded that Chandra, then non-executive chairman of ZEEL, signed the Declaration and Acknowledgment (D&A) dated December 27, 2018, without obtaining the approvals of the audit committee, board of directors, or shareholders. The regulator further held that Goenka was aware of the arrangement and allowed it to continue.
According to the order, Chandra “executed the 2018 D&A with full knowledge of its contents and purpose”, while Goenka “was aware of the arrangement under which ZEEL’s Hyderabad property was purportedly deployed as security for the borrowing entities”.
The regulator rejected the defence that the two were unaware of the transaction. It observed that Chandra and Goenka had “acted pursuant to a common understanding to deploy ZEEL’s Hyderabad property for securing the borrowings of entities controlled by them and their family members”. Sebi further held that the two ‘employed a deceptive device and participated in a scheme involving fraud in connection with dealing in ZEEL’s securities”, thereby violating the anti-fraud provisions under the Sebi Act, 1992 and the Sebi PFUTP Regulations, 2003.
Hyderabad Property Used As Loan Security
The matter relates to loans worth Rs 726 crore taken by four Essel Group entities from Indiabulls Housing Finance (IHFL) in December 2016.
According to Sebi, IHFL sought additional collateral after the value of the existing security declined. On December 27, 2018, Chandra signed the D&A on behalf of ZEEL and deposited the original title deeds of the company’s Hyderabad land measuring 17,639.64 square metres to create a first-ranking mortgage in favour of the lender.
Sebi found that the document also stated that all necessary approvals from ZEEL’s board and shareholders had been obtained. However, Sebi held that no such approvals were ever taken.
Company Also Held Liable
While ZEEL argued that it neither borrowed money nor benefited from the transaction, Sebi held the company responsible for governance lapses. Sebi found that ZEEL failed to obtain mandatory audit committee approval before the related-party transaction. It also held that the company did not disclose the unauthorised pledge of the Hyderabad property to the stock exchanges and subsequently failed to inform investors after the Delhi High Court directed IHFL to release the title deeds in June 2020.
Accordingly, Sebi held ZEEL guilty of violating disclosure and corporate governance requirements under the Listing Obligations and Disclosure Requirements (LODR) Regulations.
Defence Rejected
Goenka argued that there was no documentary evidence linking him to the mortgage transaction and that the company itself had no knowledge of the pledge.
Rejecting the defence, Sebi observed that it was “inherently not probable on preponderance basis” that Chandra could have signed the security documents without understanding their purpose or that Goenka remained unaware that ZEEL’s property was being used to secure borrowings of promoter-linked entities.
Basis For The Penalties
While determining the quantum of punishment, Sebi noted that there was no quantifiable loss to the investors and no record of similar violations by the noticees. However, it said “the grave nature of the violations” and the finding of fraud warranted both monetary penalties as well as restrictions to access the market.
