Sufficient response time be given to Zee on Invesco plea: NCLAT
The National Company Law Appellate Tribunal (NCLAT) on Thursday cut some slack for Zee Entertainment Enterprises Ltd.
The NCLAT directed the National Company Law Tribunal (NCLT) to grant Zee “reasonable and sufficient time” to file a reply to the Invesco petition seeking an extraordinary general meeting of shareholders.
Zee had moved the appellate tribunal after the NCLT, on October 5, directed the company to reply to Invesco’s petition by October 7.
Invesco Developing Markets Fund and OFI Global China, which together hold 17.8 per cent in Zee, have been demanding the EGM to move resolutions seeking the removal of Punit Goenka as MD of the company and the election of six new independent directors.
Rule 37 of NCLT Rules, 2016 says the “tribunal shall issue notice to the respondent to show cause against the application or petition on a date of hearing to be specified in the notice. Such (a) notice... shall be accompanied by a copy of the application with supporting documents.”
In its order on Thursday, Justices Jarat Kumar Jain and V.P. Singh said the company law tribunal had committed an error by failing to grant Zee reasonable and sufficient time to file its reply.
The appellate tribunal also said 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. “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 bench said.
Invesco had filed the petition in the NCLT under Section 98(1) and Section 100 of the Companies Act, 2013. Section 98 (1) empowers the tribunal to order such a meeting.
“The decision of the NCLAT today justifies our complete faith in the judicial system. The company will continue to take all the necessary steps that are in the best interests of all its shareholders and as per the applicable law,” a Zee spokesperson said.
Earlier in the day, the NCLT adjourned the hearing on Invesco’s petition saying that it would wait for the appellate tribunal’s order.
The hearing was adjourned to Friday.
The NCLT bench also remarked to Zee’s senior counsel Navroj Seervai that they had all the time to file an appeal before the appellate court, which would run into hundreds of pages, but did not have the time to submit a 3-4 page reply before the NCLT.
On Wednesday, Subhash Chandra, the founder of Zee, had alleged in an interview to Zee News that Invesco was acting in a clandestine manner.
Terming its requisition for the EGM as an “illegal step being taken by Invesco”, Chandra alleged that it is “insider trading, and a takeover… There has to be someone behind this. They don’t want to remove Punit or change the board, they want to take over the company illegally and unlawfully,” he said.
The Zee board has already signed a non-binding agreement with Sony for a merger that will allow Punit Goenka to stay on as MD for a period of five years.
Meanwhile, Zee chairman R. Gopalan has said in an interview with a news channel that the company was open to other offers.
“This (the Sony offer) is the best deal for shareholders at this point in time,” he said, adding a new twist to the battle over Zee.