The National Company Law Appellate Tribunal (NCLAT) transferred pleas filed by Axis Finance and IDBI Bank challenging the Zee-Sony merger to the bench of the chairperson, Ashok Bhushan.
NCLAT’s move comes as the chairperson-led bench is already reviewing IDBI’s insolvency plea against Zee Entertainment Enterprises Ltd. (Zee) due to outstanding dues.
The transfer also coincides with the Supreme Court reprimanding a bench for defying its orders, resulting in the resignation of judicial member Rakesh Kumar, who was previously overseeing this case.
During today’s proceedings, senior lawyer Mukul Rohatgi, representing Zee, contested the creditors’ claims, asserting that both IDBI and Axis Finance lack standing as they are neither shareholders nor creditors. Rohatgi claimed the creditors’ numerous suits against Zee in different courts aim solely to obstruct the merger.
In response, Axis Bank’s counsel pointed to letters from Essel Group chairman Subhash Chandra recognizing them as creditors and promising payment. The counsel advocated for the merger of IDBI’s and Axis Finance’s cases, emphasizing shared grievances against Zee.
However, representing IDBI, senior lawyer Ramji Srivnivasan argued against combining the cases, emphasizing IDBI’s unique plea and a pre-existing agreement with Zee, which he claims owes IDBI around ₹150 crore due to a guarantee by ZEE for Siti Networks Ltd, an Essel Group entity.
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.
These dissenting creditors, including Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank Ltd, and others, mainly took issue with a non-compete clause in the merger deal. This clause entailed an Essel Group company receiving ₹1,100 crore as non-compete fees from a Sony Group company in return for Subhash Chandra’s commitment not to challenge the merged entity.
On 30 October, Punit Goenka was reinstated as the CEO of Zee after the Securities Appellate Tribunal (SAT) revoked a ban imposed by the market regulator over allegations of misappropriation of company resources.
