The markets regulator Securities and Exchange Board of India (SEBI) on September 13, Wednesday, argued before the Securities Appellate Tribunal (SAT) that it sees significant red flags in the transactions between Zee and Essel entities.

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The scheme was to circulate Zee's own money back into the company through entities to pay back the debt of Essel entities, the SEBI counsel claimed, adding that the transactions between Zee and Essel entities can't be genuine or a coincidence.

The markets regulator argued that Zee must present evidence to show that its transactions with Essel entities were genuine and that seven Essel entities in question in the case are controlled by Zee Entertainment's Key Managerial Personnel (KMPs).

The hearing in the case will resume on September 14.

The case pertains to Punit Goenka, the former chief of Zee Entertainment Enterprises Ltd, moving the SAT to seek a stay on the SEBI order barring him from holding key positions within four Zee group firms and in the merged entity of ZEEL and Sony Pictures Networks India.

The SEBI order has alleged that Goenka and his father, Subhash Chandra, former chairman of Zee Entertainment Enterprises Ltd (ZEEL), abused their roles as directors and Key Managerial Personnel (KMPs) of a listed company by siphoning off funds for their own benefit.

Goenka's move to challenge SEBI's confirmatory order came in response to its decision on August 14, as per which the duo has been prohibited from holding positions as directors or KMPs in at least four Zee group companies as well as in the merged entity of ZEEL and Sony Pictures Networks India, until further directions from the regulator.