NCLT issues notice to Sony in plea by Zee Ent to implement merger

The National Company Law Tribunal (NCLT) Mumbai Bench on Tuesday issued notice to Sony Pictures Networks (now Culver Max) in a plea filed by Zee Entertainment Enterprises Limited (ZEEL) seeking directions to implement its merger with Sony.

The tribunal told Sony to file a reply in two weeks and posted the matter for March 12.

The plea of Mad Men Film Ventures, a shareholder of Zee, seeking enforcement of the merger has been clubbed together with ZEEL's plea and will be heard on the same date.

ZEEL told the NCLT that since it was the tribunal that had approved the merger, it has jurisdiction to hear petitions to implement the merger.

Meanwhile, Sony argued that they would be filing an application questioning the maintainability of ZEEL's plea. Counsel for Sony told the tribunal that they have already filed a plea questioning the maintainability of the Mad Men Film's plea.

On January 30, the NCLT had also issued notice to Mad Men Film Ventures.

On Sunday, the Singapore International Arbitration Centre rejected the emergency arbitration petition filed by Japanese major Sony against Zee Entertainment Enterprises over their failed merger, citing lack of jurisdiction, Business Standard reported.

Sony Pictures Networks India had filed the petition against Zee Entertainment after terminating their merger that would have created a $10 billion entertainment giant with 25 per cent of the market share among the general entertainment channels.

The litigation between Zee and Sony started after Sony sought $90 million as termination fees from Zee, saying it did not comply with several pre-conditions set in the merger agreement. Zee denied Sony's allegations and made counterclaims against the Japanese firm at the SIAC.

As per news reports, Sony’s notice to Zee alleged the Indian company had not made commercially reasonable efforts to meet specific financial thresholds, including cash availability. According to Sony, Zee’s cash position as of September 30, Rs 476 crore, fell “much below the requirements” of the merger agreement.

Sony also expressed reservations about Punit Goenka becoming the Managing Director and Chief Executive Officer of the merged entity after the Securities and Exchange Board of India (SEBI) took action against Goenka for alleged fund diversion. The Securities Appellate Tribunal had set aside the SEBI order in October last year.