NCLAT reserves order on IDBI, Axis Bank pleas against Zee-Sony merger
IDBI Bank and Axis Bank challenging the Zee-Sony merger which has been called off. The appellate tribunal will decide on 15 April whether the challenges to legal sanction of the Zee-Sony merger could be heard when the merger itself has been called off. IDBI Bank and Axis Bank had urged NCLAT to defer the pending case until the National Company Law Tribunal (NCLT) decides on Zee's plea to enforce the merger.
However, Zee argued that the pendency of the plea in NCLT will have no bearing on the present case and urged NCLAT to continue hearing the case. On 10 August, the Mumbai bench of the NCLT approved the merger of Zee Entertainment and Sony Pictures Networks India (SPNI), paving the way for the creation of a $10-billion media giant in the country andrejected the claims of dissenting creditors to the merger. These dissenting creditors, including Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank Ltd, and others, mainly took issue with a non-compete clause in the merger deal.
This clause entailed an Essel Group company receiving ₹1,100 crore as non-compete fees from a Sony Group company in return for Subhash Chandra's commitment not to challenge the merged entity. This led IDBI Bank, IDBI Trusteeship and Axis Bank to challenge the merger in NCLAT. In December, NCLAT refused to put an interim stay on the merger and deferred the case to January.
However, on 22 January, the mega-merger between Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India (SPNI) was called off with the latter issuing a termination letter to formally exit from the amalgamation agreement. One of the main reasons behind the $10 billion deal being derailed was the lack of consensus over who would head the merged entity. While
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