In a significant development regarding the Zee-Sony merger, the National Company Law Appellate Tribunal (NCLAT) has taken the decision to transfer all associated pleas to the bench presided over by Chairperson Ashok Bhushan. This move was motivated by ongoing deliberations concerning IDBI Bank’s insolvency plea against Zee Entertainment Enterprises Ltd. (Zee) due to unpaid dues, which is already under review by the chairperson-led bench.
This transfer of cases coincides with recent events involving the resignation of judicial member Rakesh Kumar, who had previously overseen this matter. The Supreme Court had reprimanded a bench for non-compliance with its orders, prompting this personnel change.
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During the proceedings, senior lawyer Mukul Rohatgi, representing Zee, challenged the claims of creditors Axis Finance and IDBI Bank. He contended that neither of these financial institutions has the requisite standing as shareholders or creditors. Rohatgi further suggested that the creditors’ multiple lawsuits against Zee across various courts are merely an attempt to obstruct the merger.
In response, Axis Bank’s counsel presented correspondence from Essel Group chairman Subhash Chandra, acknowledging the creditor status of Axis Finance and promising payment. The counsel advocated for the consolidation of IDBI’s and Axis Finance’s cases, highlighting their shared grievances against Zee.
Conversely, senior lawyer Ramji Srivnivasan, representing IDBI, argued against merging the cases. He emphasized the uniqueness of IDBI’s claim, which stems from a pre-existing agreement with Zee, asserting that Zee owes IDBI approximately ₹150 crore due to a guarantee for Siti Networks Ltd, an entity within the Essel Group.
The dispute stems from dissenting creditors, including Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank Ltd, and others, primarily objecting to a non-compete clause in the merger agreement. This clause involves an Essel Group company receiving ₹1,100 crore as non-compete fees from a Sony Group company in exchange for Subhash Chandra’s commitment not to challenge the merged entity.
On August 10, the Mumbai bench of the National Company Law Tribunal (NCLT) had approved the Zee Entertainment and Sony Pictures Networks India (SPNI) merger, setting the stage for the creation of a $10-billion media conglomerate in India. Furthermore, on October 30, Punit Goenka was reinstated as the CEO of Zee, following the Securities Appellate Tribunal’s decision to lift a ban imposed by the market regulator due to allegations of misappropriation of company resources.
