NCLAT sets aside tribunal order on Zee, Sony merger

In a major relief to Zee Entertainment Enterprises Ltd, an appeals tribunal on Friday set aside a National Company Law Tribunal (NCLT) order asking stock exchanges to review approvals for its merger with Sony Pictures Networks India.

The NCLT order did not comply with the principles of natural justice, a National Company Law Appellate Tribunal (NCLAT) bench of justices Rakesh Kumar and Alok Srivastava held, without going into the merits of the case. “Accordingly, the impugned order is set aside, and the matter is remitted to the NCLT to examine the same and pass appropriate order after hearing both the parties without being influenced by this order,” the NCLAT order said.

On 11 May, an NCLT bench led by Justice H.V. Subba Rao directed the National Stock Exchange and BSE to not just reconsider their prior approvals but also to reassess and validate the non-compete clause in the merger agreement. This came after the Securities and Exchange Board of India (Sebi) asked exchanges to put on record in the tribunal an ex-parte order in the matter of the Shirpur Gold Refinery fund diversion case.

Aggrieved by the order, Zee approached the appeals tribunal. Representing Zee, senior counsel Mukul Rohatgi argued that the company was not given a fair chance to respond to the affidavit filed by the stock exchanges before the NCLT, terming it a violation of the principles of natural justice.

Setting aside the previous order, the NCLAT bench said the issues arising out of the Sebi report can be dealt with by the NCLT.

Counsels for NSE and BSE, while presenting the matter before the NCLT, had raised some fresh points relating to the scheme of the merger while placing on record an important Sebi order dated 25 April.

The Zee-Sony merger, the largest in India’s media entertainment industry, has faced opposition from various parties, including IDBI Bank, JC Flower ARC and Axis Finance.

Earlier, both NSE and BSE, as well as the Competition Commission of India, had cleared the merger, and the shareholders had also voted in its favour.

The NCLT approval is among the last few regulatory approvals required to complete the merger.

On 18 May, Sony Group Corp chairman and CEO Kenichiro Yoshida said during the company’s corporate strategy meeting that the merger is expected to close within the first half of the current financial year.