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Zee gears up for legal battle against Sony
- The Punit Goenka-led firm moved the tribunal seeking directions to implement the merger.
Zee Entertainment Enterprises Ltd on Wednesday dragged Sony Pictures Networks India (now Culver Max Entertainment Pvt. Ltd) before the National Company Law Tribunal (NCLT), following the inglorious end to their two-year engagement.
The Punit Goenka-led firm moved the tribunal seeking directions to implement the merger, while also initiating legal action to contest Culver Max and Bangla Entertainment Pvt. Ltd’s (BEPL) claims in the arbitration proceedings before the Singapore International Arbitration Centre (SIAC), an exchange filing showed.
The company in its filing stated that Culver Max and BEPL are in default of their obligations to give effect to and implement the scheme, sanctioned by NCLT. “The company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the Merger Scheme, sanctioned by the Hon’ble National Company Law Tribunal. The company has reserved all its rights in this regard,” Zee added.
The merger between two of the largest media companies was seen as one of the biggest in the Indian media and entertainment sector, before Sony called it off and demanded compensation for Zee breaching terms of the agreement.
Consequently, in its reply issued to Culver Max and BEPL, Zee strongly denied any breach of its obligations under the Merger and Cooperation Agreement (MCA) and reiterated that it had complied with all its obligations in good faith.
Moreover, the company has denied that Culver Max and BEPL are entitled to terminate the MCA and the claim for a $90 million termination fee is legally untenable and has no basis whatsoever.
Essentially, Sony sought $90 million in termination fees for alleged breaches of the merger agreement and emergency interim relief by “invoking arbitration” before SIAC.
The merger scheme of Zee and Sony received all necessary regulatory approvals since its announcement held in December 2021.
However, the merger hit a major roadblock after Securities and Exchange Board of India (Sebi) issued an order against Subhash Chandra and Punit Goenka for alleged fund diversion, and barred them from holding any key managerial positions in listed entities.
This led to a legal tussle between Sebi and the Goenkas and the matter was languishing in the courts for a long time.
On 31 October, Punit Goenka was reinstated as the managing director and chief executive of Zee Entertainment after the Securities Appellate Tribunal (SAT) overturned a ban imposed by the markets regulator for allegedly siphoning off company funds.
Despite facing resistance from certain lenders against the merger, NCLT in August gave its final nod to the merger. The investigation against the Goenkas is still pending with Sebi, for which it received significant flak in the matter.
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First Published:24 Jan 2024, 11:26 PM IST
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