Zee appeals NCLT’s Sony merger ruling
1 min read . Updated: 23 May 2023, 10:22 PM IST
PremiumNCLT, had directed the NSE and the BSE to reconsider their prior approvals for the merger of the two companies. The tribunal also asked the exchanges to reassess the non-compete clause of the merger.
Zee Entertainment Enterprises Ltd has moved the National Company Law Appellate Tribunal (NCLAT) to contest an interim ruling by the National Company Law Tribunal (NCLT)’s Mumbai bench related to its proposed merger with Sony Pictures Networks India Pvt. Ltd.
NCLT, had directed the NSE and the BSE to reconsider their prior approvals for the merger of the two companies. The tribunal also asked the exchanges to reassess the non-compete clause of the merger.
In its petition before NCLAT, Zee said the 11 May order of the tribual didn’t follow the principles of natural justice and due process of law. Zee said that it wasn’t allowed to respond to the affidavits filed by the NSE and the BSE. “The NCLT does not have jurisdiction to guide an objector on next steps. NCLT must pass orders in interest of the shareholders of a company and not in interest of a limited set of people," the company said in its plea, challenging the NCLT order.
Mint first reported on 11 May that NCLT had asked the two exchanges to take into consideration an ex-parte order by the Securities and Exchange Board of India (Sebi) in the matter of the Shirpur Gold Refinery fund diversion case after the market regulator asked the exchanges to submit the order as part of the records in the tribunal.
While the NCLT has listed the matter for further hearing on 16 June, Zee is of the view that there is a huge difference between what was said by the Justices and what was eventually said in the order of 11 May. The NCLAT is expected to take up Zee’s plea on Thursday.
According to the Sebi order, the regulator had received a complaint alleging that loans taken by Shirpur from banks and financial institutions had not been used for its operations but were instead siphoned off to firms under the control of Zee founder Subhash Chandra and his family. It was also said that Shirpur was not providing information to the public shareholders of the firm on its operations.
The merger of Zee and Sony is being opposed by lenders to Zee, including IDBI Bank, Axis Finance and JC Flower ARC. They are seeking a direction from NCLT to Zee promoters to repay loans using the funds they are supposed to receive as part of the non-compete fee from Sony.
However, on 19 May, NCLT dismissed IDBI Bank’s petition seeking insolvency proceedings against Zee, which came as a big relief to the company.