Home Company The arbitrator dismisses Sony’s plea against Zee’s move to NCLT

The arbitrator dismisses Sony’s plea against Zee’s move to NCLT

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The Singapore International Arbitration Centre (SIAC) has rejected an interim relief for Sony in its plea against Zee Entertainment’s move to approach the National Company Law Tribunal (NCLT) for the implementation of the merger scheme.

The exchange filing cited SIAC’s statement, noting that the Emergency Arbitrator lacks the jurisdiction or authority to prevent the company from approaching the NCLT to execute the merger scheme. These matters fall within the statutory framework and are meant for the NCLT to decide.

In a Sunday filing to the stock exchanges, Zee stated that the emergency arbitrator had issued a ruling, rejecting the application by Sony’s entities, Culver Max Entertainment and Bangla Entertainment. The arbitrator stated that it lacked jurisdiction or authority to restrain Zee from approaching the NCLT.

“The emergency arbitrator’s order stated, ‘These are issues falling within the statutory framework and are to be decided by the NCLT,’ as quoted by Zee.”

Sony initiated arbitration against Zee after terminating the proposed $10-billion merger on January 22, citing unmet closing conditions and imposing a $90-million (around ₹750 crore) termination fee.

In retaliation, Zee approached the Mumbai bench of the NCLT on January 24 to enforce the previously approved merger, which had received the tribunal’s approval in August of the previous year. Zee also contested Sony’s claims at the SIAC.

In a filing on January 24, Zee rejected Sony’s assertion that closing conditions for the proposed merger were not met, stating it had fulfilled all obligations in good faith.

Zee also criticized Sony’s $90-million termination fee, deeming it ‘legally untenable’ and lacking any basis.

The proposed merger encountered difficulties related to leadership, with Sony advocating for NP Singh, its India MD & CEO, as the leader of the merged entity. In contrast, Zee insisted on honoring the December 2021 merger agreement, which featured Zee’s MD & CEO Punit Goenka as the face of the combined entity. Sony contested this due to the ongoing Securities and Exchange Board of India’s (Sebi’s) investigation against Goenka.

Before the January 21 merger deadline, Essel group chairman Subhash Chandra, who is also Punit Goenka’s father, wrote to Finance Minister Nirmala Sitharaman, seeking the government’s intervention to protect the interests of Zee’s minority shareholders.

In recent media interviews, Chandra hinted at the promoter family’s intention to augment its 3.99% stake by 5%, forming part of a long-term plan to eventually raise the stake to 26%. He asserted that the family would avoid taking on debt for this purpose, relying instead on family members, including his younger son Amit Goenka.

The Singapore International Arbitration Center (SIAC) pioneered the process, receiving over 130 applications since 2010 for an Emergency Arbitrator, appointed within a day if relief is accepted.

Sony initiated arbitration against Zee for breach of terms, and Zee contested claims at SIAC. Zee deemed Sony’s $90 million termination fee demand legally untenable and denied breaching the merger agreement.

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