NCLAT Grants ZEEL Time To File A Reply To Invesco

The National Company Law Appellate Tribunal (NCLAT) has ordered the National Company Law Tribunal (NCLT) to provide Zee Entertainment Enterprises Limited (ZEEL) a fair and sufficient chance to respond to a petition brought by Invesco Developing Markets Fund.

ZEEL has filed an appeal with the NCLT against an order from the NCLT dated October 5th requiring the business to respond to a petition filed by Invesco by October 7th. For failing to hold an extraordinary general meeting, Invesco has filed a complaint with the NCLT against ZEEL and three of its directors, including MD and CEO Punit Goenka (EGM).

In its 15-page order, the NCLAT said that Section 98 of the Companies Act does not prescribe any time limit or limitation on the NCLT to pass an order within that time limit. “Engrafting the provisions of Section 100(4) in Section 98 would be wholly misconceived and untenable. Undisputedly, the reliefs sought in the Company Petition are specifically under Section 98 of the Companies Act. Given that Section 98 does not prescribe any time limit, the Learned NCLT ought to have granted reasonable time to the Appellant to file a reply,” the order reads.

While disposing of ZEEL's appeal, the NCLAT also noted that the NCLT has committed an error in not granting reasonable and sufficient time for filing a reply, which is a complete violation of Rule 37 of NCLT Rules and Principles of Natural Justice. “Therefore, in the circumstances, as stated above, we are of the opinion that reasonable and sufficient opportunity should be given to the Appellants for filing a reply. After hearing both the parties, the Learned NCLT should proceed further,” the order stated.

ZEEL had filed a Company Appeal seeking to assail the impugned order dated 5 October 2021, contending that the learned NCLT in gross violation of Rule 37 of the NCLT Rules and Principles of Natural Justice and fairness has rejected its request for the grant of sufficient time to file its reply/counter to the Company Petition, which is being finally heard by it within six days from the filing of the Company Petition without issuing any notice.

The broadcaster contended that the Learned NCLT has erred in exercising its jurisdiction by failing to grant the Appellants a reasonable and fair opportunity to file their reply/counter to the Company Petition. It further stated that the learned NCLT has granted less than two days to the company and its directors to file their replies, even though no notice was issued in the Company Petition until 5 October 2021.

Two of Zeel’s biggest investors, Invesco Developing Markets Fund and OFI Global China Fund LLC that together hold 17.88% stake in the company, last month sought an extraordinary general meeting to remove MD & CEO Punit Goenka and two independent directors Manish Chokhani and Ashok Kurien. Chokhani and Kurien subsequently resigned from the board.

Apart from seeking Punit's ouster, Invesco has also proposed the names of six independent directors - Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta.

Last week, ZEEL had announced a merger plan with Sony Pictures Network India (SPNI), under which the latter will hold a 52.93 per cent stake in the merged entity and Zee the remaining 47.07 per cent. As per the ZEE-Sony deal, Goenka would have remained at the helm of the combined entity as MD and CEO. In fact, Goenka's appointment as MD and CEO is one of the conditions for the merger deal between the two companies.