Zee's NCLT Petition Questions 'Demands Of Foreign Entities'

The Mumbai bench of the National Company Law Tribunal (NCLT) accepted the petition from ZEEL shareholders, issuing a notice to Culver Max Entertainment (formerly known as Sony Pictures Network India). Sony has been instructed to submit a response within three weeks.

Reports indicate that Mad Men Film Ventures, a shareholder of ZEEL filed a petition on Tuesday urging for the completion of the approved merger between ZEEL and Sony, sanctioned by the NCLT in August 2023.

The tribunal rejected assertions from the counsel that the NCLT's approval was contingent on various criteria that could be fulfilled or waived in writing.

The next hearing for this matter is scheduled for March 12, as per the NCLT.

On January 24, ZEEL took legal action against Sony's cancellation of the $10 billion merger deal. ZEEL has urged Culver Max Entertainment and Bangla Entertainment (BEPL) to retract the termination of the deal promptly and affirm their commitment to fulfill obligations for implementing the sanctioned Merger Scheme by the National Company Law Tribunal.

The Full Petition

ZEE took significant amount of efforts and obtained multiple regulatory approvals - SEBI, income tax authority, official liquidator, regional director and NCLT over the past two years whilst dealing with the public market, and objections from various parties, demonstrating their unwavering commitment and clear intent to close the merger. Even if one were to look at it independently, as far as ZEE’s promoters are concerned, if the merger was implemented, they would receive their non-compete fees and therefore they had no reasons whatsoever to stall or abort the deal. Sony’s U-turn on the deal is solely and entirely their own decision.

Sony’s decision to terminate the deal at this advanced stage of the merger raises pertinent questions regarding their timing and motivations. Having been privy to ZEE's financial position and business operations over the past two years, the question is why Sony chose this late stage to express concerns? From Sony’s conduct, it is clear that it was pre-determined to terminate the merger agreement and it was only waiting for the end date and the 30-day discussion period to expire. The abrupt withdrawal by Sony not only raises questions about their commitment to global partnerships but also signals an unfortunate setback to the industry. Sony's actions may be perceived as a lack of faith in the capabilities and potential of Indian businesses, potentially conveying a negative message to the global community. Sony’s termination of the merger not only damages the reputation of the Indian business landscape but also undermines the larger implications, particularly at a time when India is gaining recognition as the world's fastest-developing economy.

It also sets a concerning precedent for other foreign companies, potentially discouraging them from investing in the Indian market and eroding foreign trust in the Indian market. It also sends a disheartening signal to Indian businesses about the stability and reliability of international partnerships.