Axis Finance Ltd has told an appeals court that the National Company Law Tribunal (NCLT) approved the Zee-Sony merger in “contravention” of a regulatory order against Punit Goenka, former managing director and chief executive officer of Zee Entertainment Enterprises Ltd.
The non-bank lender moved the National Company Law Appellate Tribunal (NCLAT) on 14 September against NCLT’s 10 August order approving the deal. “The adjudicating authority (NCLT) has failed to appreciate that the scheme is ex-facie illegal, unfair and unjust,” said Axis Finance’s 43-page petition, a copy of which was seen by Mint.
One of the key conditions of the Zee-Sony merger is that Goenka would continue as the MD and CEO of the merged entity. However, on 12 June, the Securities and Exchange Board of India (Sebi) restrained Goenka and his father Subhash Chandra from holding key managerial positions in any listed entity in a case of suspected fund diversion. On 10 August, the NCLT approved the merger, among the biggest in India’s media and entertainment sector, dismissing objections from various creditors to Zee.
The Axis Finance petition in NCLAT claimed the merger could not have been sanctioned until an integral part of the scheme—Punit Goenka as head of the merged entity— was resolved.
While approving the merger, the NCLT also did not consider the fact that Chandra had failed to honour his personal assurance that he would pay dues of ₹66 crore, said a senior counsel from law firm MDP & Partners, which represents Axis Finance.
Axis Finance is not the only lender to be aggrieved by the merger process. IDBI Trusteeship, IDBI Bank and JC Flowers ARC have also opposed the merger; however, NCLT had dismissed their objections stating they have no locus standi in the matter. Meanwhile, IDBI Bank has already challenged the NCLT order in NCLAT. In both cases, NCLAT has asked Zee to file a response.