NCLT Admits Fresh Petition for Enforcement of Cancelled Zee-Sony Merger Deal

On Tuesday, the National Company Law Tribunal (NCLT) in Mumbai admitted a fresh petition filed by a Zee Entertainment Enterprises Ltd (ZEEL) shareholder seeking the enforcement of the now-cancelled merger deal between ZEEL and Sony.

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Sony Directed to File Reply

The Mumbai bench of NCLT also directed Sony Pictures Network India, now known as Culver Max, to file a reply within three weeks and fixed the next date of hearing on March 12.

Sony Announces Termination of Merger Agreement

On January 21, Sony Group Corp (SGC), the Japanese parent company of Sony Picture Network India (SPNI) and BEPL, announced the termination of the USD 10 billion merger agreement with ZEEL, while seeking USD 90 million for breach of conditions besides initiating arbitration.

Petition Filed by ZEEL Shareholder

The latest NCLT notice came on a petition filed by Mad Men Film Ventures, a shareholder of ZEEL. Mad Men Film Ventures earlier sent an application requesting both ZEEL and Sony to implement the merger deal as it was approved by the NCLT in August 2023.

Dispute Over Leadership of Merged Company

Shyam Kapadia, counsel to the ZEEL shareholder, informed the tribunal that his client had sent the application to Sony on December 5, 2023. However, Sony has not yet filed a response, he said. Kapadia also mentioned that from media reports, it appears that there was a dispute between ZEE and Sony on who would lead the resulting company post the merger, even though the scheme of arrangement merger clarified who would head the merger.

Sony's Objection to the Petition

Darius Khambata, who represented Sony, urged the tribunal to dismiss the Mad Men Film Ventures plea, saying that it was not maintainable. He argued that it was clear from the application and the affidavit received from the shareholder that he was nothing but a proxy for ZEE.

Conditional Nature of the Merger

Khambata further stated that one of the main clauses of the scheme of arrangement states that the merger was conditional upon the satisfaction of certain conditions precedent in a separate contract between Zee and Sony. He emphasized that the scheme was entirely conditional and some of the conditions had not been met.

Next Date of Hearing

The tribunal rejected Khambata's arguments and fixed the next date of hearing on March 12.