The Securities and Exchange Board of India (SEBI) has recently passed a final Order on the matter of the unauthorised pledging of the immovable property of Zee Entertainment Enterprises Limited (ZEEL). The update briefly analyses the final order passed by SEBI.

Background
The proceedings against Zee Promoters (i.e. Mr Subhash Chandra and Mr Punit Goenka) arose out of SEBI’s investigation into the unauthorised use of an immovable property owned by ZEEL as collateral for loans aggregating to ₹ 726 crores availed by four Essel Group entities from Indiabulls Housing Finance Limited (IHFL). The investigation was initiated after ZEEL's statutory auditors, in their audit report for FY 2018–19, observed that the original title deeds of the
Hyderabad property were not available with the Company.

SEBI alleged that on 27 December 2018, Mr Subhash Chandra, acting as an authorised signatory of ZEEL, executed a Declaration and Acknowledgement and deposited the original title deeds with IHFL to create security over the Hyderabad property for the benefit of the borrowing entities. According to SEBI, the transaction was undertaken without obtaining approval from ZEEL's Board of Directors, Audit Committee, or shareholders.

SEBI further alleged that the borrowing entities were promoter-related, thereby making the transaction a related-party transaction requiring prior Audit Committee approval under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). It was also alleged that ZEEL failed to disclose the transaction, the related party relationship, the contingent liability arising from the pledge, the subsequent litigation before the Delhi High Court initiated by IHFL concerning the said loan, and other material developments to the stock exchanges and in its financial statements.

SEBI Analysis
After considering the replies and submissions of ZEEL, Mr Subhash Chandra and Mr Punit Goenka, SEBI concluded that ZEEL's Hyderabad property had been deployed as security for loans availed by promoter-related entities without the requisite corporate approvals and disclosures. SEBI held that the transaction constituted a related party transaction and that the failure to obtain prior Audit Committee approval amounted to a violation of the LODR Regulations.

SEBI further held that ZEEL failed to make material disclosures regarding the unauthorised pledge, related party transaction, litigation concerning the property, and release of the title deeds. According to SEBI, these omissions resulted in inaccurate financial reporting and deprived shareholders and investors of material information.

SEBI also concluded that Mr Subhash Chandra, by executing the Declaration and Acknowledgement without corporate authorisation, breached his fiduciary duties and facilitated the unauthorised deployment of ZEEL's assets. While Mr Punit Goenka did not execute the mortgage documents, SEBI held that, after becoming aware of the transaction, he failed to ensure appropriate disclosures, accurate financial reporting and corrective action. SEBI therefore held both individuals liable for violations of the PFUTP Regulations and various provisions of the LODR Regulations.

SEBI’s Directions
SEBI has restrained ZEEL from accessing the securities market and from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of two months and restrained Mr Punit Goenka and Mr Subhash Chandra from accessing the securities market and from buying, selling or otherwise dealing in securities for a period of twelve months each. Additionally, SEBI imposed monetary penalties of ₹ 30 lakh on ZEEL, ₹ 58 lakh on Mr Punit Goenka and ₹60 lakh on Mr Subhash Chandra.

MHCO Comment
This order pertains to disclosure obligations on the listed companies. In the present matter, the unauthorised pledge of ZEEL’s Hyderabad property was not disclosed. Although SEBI acknowledged that the pledge of ZEEL's Hyderabad property was undertaken without the requisite board, audit and shareholders approvals and was therefore unauthorised, it nevertheless held that the actual deposit of the title deeds and the subsequent exposure of the company’s asset to third parties create liability on the company to duly disclose as per the LODR Regulation. In doing so, SEBI distinguished the question of the legal validity of the said pledge from the regulatory consequences arising from the transaction, emphasising that an unauthorised transaction may still attract liability for disclosure requirements, where it materially affects a listed company and its investors. The order therefore highlights that all listed companies must ensure the disclosure of all material events under the LODR Regulation and accurate financial reporting in accordance with the accounting standards.

Date: 5 August 2026

By:
- Mr. Bhushan Shah, Partner
- Mr. Abhishek Nair, Associate
- Ms. Sayali Kshirsagar, Associate

Disclaimer: This legal update is intended for general information purposes only and does not constitute legal advice. Readers are advised to seek specific legal advice before acting upon any information contained herein.

This update was released on 05 Aug 2026.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
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