Zee-Sony merger: NCLAT transfers Axis Finance & IDBI appeals to chairperson-led bench

IDBI and Axis Finance's challenge to Zee-Sony merger

A bench of the National Company Law Appellate Tribunal (NCLAT) on October 31, transferred the appeals filed by Axis Finance and IDBI Bank challenging the National Company Law Tribunal (NCLT) order approving the Zee-Sony merger to the bench of the Chairperson.

The bench had opined that since the Chairperson-led bench was hearing IDBI's insolvency plea against Zee Entertainment Enterprises Limited (ZEEL), it would be appropriate for the same bench to hear these petitions.

This would be the third time, challenges to Zee-Sony merger would be transferred to a different bench in under a month. Earlier, the case was heard by a bench led by Justice (retd) Rakesh Kumar, who tendered his resignation on October 30, pursuant to contempt proceedings against him in the Supreme Court. The matter was then placed before a bench led by Justice (retd) Anant Bijay Singh, who transferred it to Chairperson's court.

The appellate tribunal, however, took the decision to transfer the case after hearing the arguments by Axis Finance and IDBI Bank for almost 45 minutes.

On October 12, ZEEL's lawyers Mukul Rohatgi and Arun Kathpalia urged the tribunal not to pass any orders in the case as Axis Finance does not have the locus to file such a plea. Furthermore, they objected to the adjournment as IDBI's case arose out of a different set of facts.

However, the appellate tribunal deferred the hearing of the case without issuing notice.

The National Company Law Tribunal (NCLT) had on August 10 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.

The tribunal also dismissed all objections regarding the merger.

NCLT initially reserved its verdict on the merger between Zee Entertainment Enterprises and Culver Max Entertainment (previously known as SPNI).

The bench comprising HV Subba Rao and Madhu Sinha 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.

Also Read: Lifting of Sebi ban on Punit Goenka to speed up Zee-Sony merger, say legal experts

In December 2021, Zee Entertainment and Sony Pictures reached an agreement to combine their businesses. Subsequently, both companies approached the tribunal to seek approval for the merger, having already obtained necessary permissions from the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and other regulatory bodies such as the Competition Commission of India (CCI) and the Securities and Exchange Board of India (SEBI).