New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday denied a plea from Axis Finance and IDBI Bank for a stay on the merger between Zee Entertainment Enterprises (ZEEL) and Sony Pictures Networks India.
The tribunal issued a notice to ZEEL, emphasizing that the progress of the merger hinges on court decisions. It, however, clarified that a stay cannot be granted without first conducting a thorough examination of the case’s merits.
The matter will be next heard on 8 January.
On 10 August, the Mumbai bench of the National Company Law Tribunal (NCLT) had approved the merger of Zee Entertainment and Sony Pictures Networks India (SPNI), paving the way for the creation of a $10-billion media giant in the country.
This approval had overridden objections to the merger scheme by various creditors, including Axis Finance, JC Flower Asset Reconstruction Co, and IDBI Bank.
During today’s hearing, additional solicitor general N Venkatraman, representing the lenders, pressed for an immediate suspension of the merger. He argued that allowing the merger to proceed would impede the banks’ ability to recover funds. Venkatraman also pointed out that ZEEL is a guarantor for loans given to Essel Group’s Siti Networks Ltd.
Senior lawyer Mukul Rohatgi, representing ZEEL, challenged the validity of the lenders’ plea. He asserted that the lenders neither possessed 5% of the company’s debt nor 10% of its shareholding, rendering them non-stakeholders in the merger. Rohatgi also highlighted that the loans in question were extended to Siti Networks, not ZEEL.
Apart from legal challenges, the merger between Sony and ZEEL has been plagued with internal obstacles, primarily concerning leadership roles in the merged entity. Both parties desire their current heads—NP Singh, MD & CEO of Sony India, and Punit Goenka, MD & CEO of ZEEL—to lead the new media company.
This leadership impasse has hindered progress towards finalizing the merger, with the deadline of 21 December rapidly approaching. According to a report by the Financial Express, Sony disagrees with Zee’s stance. A major sticking point has been the now-reversed Securities and Exchange Board of India’s (Sebi) ban on Goenka.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
