The source further stated that the NCLT order will be challenged on the grounds that ZEEL was not provided adequate opportunity to present its side of the argument, and the fact that the NCLT doesn’t have jurisdiction over issues like non-compete fees.
“The NCLT order will be challenged before the NCLAT in a day or two,” the source said.
On May 11, the Mumbai bench of the NCLT directed the National Stock Exchange and the BSE to reconsider their respective initial approvals for the Zee-Sony union and issue updated no-objection certificates before the next hearing, posing fresh obstacles for the proposed merger of the media companies.
The division bench, headed by judicial member HV Subba Rao and technical member Madhu Sinha, will now hear the case on June 16.
The NCLT has instructed the exchanges to reassess and validate the non-compete clause of the merger, which had previously received approval from both the exchanges and the Securities and Exchange Board of India (Sebi).The NCLT directive to the exchanges comes after an adverse interim ruling by the Securities and Exchange Board of India (Sebi) on a promoter entity of the Essel Group, which is the also promoter of ZEEL.The stock exchanges have also been directed to review whether the payment method for the non-compete fee between two Mauritius entities complies with the relevant Sebi policies.
Under the terms of the proposed deal, Sony Pictures Entertainment will indirectly hold a majority of 50.86% in the combined company, while the founders of Zee will own 3.99%, and 45.15% will be with the other shareholders of Zee, including the public. Sony will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.
