The National Company Law Appellate Tribunal (NCLAT) on December 15 refused to grant a stay on the merger of media giants Zee Enterteinment Enterprises Limited (ZEEL) and Sony. The tribunal has however issued notice in the plea and listed the case for hearing on January 8.
Axis Finance and IDBI bank had challenged the merger in the NCLAT.
During the course of the hearing, Additional Solicitor General (ASG) N Venkatraman, who appeared for IDBI Bank, argued that the ZEEL stood guarantee for loans they had given to an Essel entity and they would not be able to recover the loan from ZEEL if the merger progresses . He thus urged the NCLAT to stay the progress of the merger.
Appearing for ZEEL, senior advocates Mukul Rohatgi, Abhishek Manu Singhvi and Arun Kathpalia vehemently objected to any stay being granted and argued that neither IDBI nor Axis Finance have the locus to file the plea as per law. Rohatgi told the court that these companies do not have the requisite lending or the share capital as per law to challenge Zee-Sony merger.
The NCLAT noted that while the merger is subject to the orders of the court, they cannot stay the same without hearing the case on merits. Thus, the appellate tribunal directed responses to be filed and adjourned to case to January 8.
On the last date of hearing on October 31, the NCLAT transferred the cases to a bench led by chairperson Justice (retd) Ashok Bhushan.
On October 12, ZEEL's lawyers Mukul Rohatgi and Arun Kathpalia urged the tribunal not to pass any orders in the case, saying Axis Finance didn't have the locus to file such a plea. They also objected to the adjournment as IDBI's case arose out of a different set of facts.
The NCLT had on August 10 approved the merger of Zee Entertainment and Sony Pictures Networks India, paving the way for the creation of a $10-billion media giant in the country.
An NCLT bench of HV Subba Rao and Madhu Sinha had initially reserved the judgment after creditors such as Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship raised concerns about the scheme.
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