Zee-Sony Merger: NCLAT Sets Aside Order Directing Exchanges To Reconsider Approval

The National Company Law Appellate Tribunal on Friday set aside the May 11 order of the company law tribunal, which had asked the stock exchanges to reconsider their approval of the Zee-Sony merger.

To recap, the National Company Law Tribunal's decision emanated from an adverse order by the Securities and Exchange Board of India against an Essel Group entity: Shirpur Gold Refinery Ltd. On April 25, SEBI passed an order saying Shirpur diverted its assets worth over Rs 400 crore between 2019 and 2021 for the benefit of its connected entities.

Shirpur is a listed company promoted by Jayneer Infrapower and Multiventures Pvt., a company owned by the family members of Subash Chandra, the promoter of Essel Group companies. The list of shareholders of Jayneer includes several members of the Goenka family, including Punit Goenka, chief executive officer of Zee Entertainment Enterprises Ltd.

After SEBI passed this order, it directed the stock exchanges to bring it to the notice of the NCLT, where the merger proceedings are underway. The tribunal had directed the exchanges to take a call on whether their approval of the Zee-Sony merger requires a review.

Against this direction, Zee Entertainment approached the NCLAT.

Senior Advocate Mukul Rohatgi appeared on behalf of Zee and submitted that the NCLT order was passed without giving the company an opportunity to be heard. The bench directed NSE and BSE to review their approval for the merger and provide a fresh No Objection Certificate, but that would take the process back to its initial phase, even after getting the approval in the past, he argued.

Counsels on behalf of NSE and BSE submitted that they placed the April 25 order before the NCLT, as per SEBI's directions. They further expressed to take steps as per NCLAT's directions.

On hearing the submissions, the bench noted that while reviewing the no objection certificate, the exchanges should give Zee an opportunity to be heard. To this, Zee submitted that before the exchanges do that, the court must also give it an opportunity to be heard.

The appellate tribunal, therefore, redirected the matter to the NCLT, asking the tribunal to hear the parties and decide the matter accordingly.