Zee approaches NCLAT against NCLT order on Invesco's plea for EGM

Zee seeks more time to file reply on Invesco's arguments for convening an EGM

Zee Entertainment Enterprises has on Wednesday moved the appellate tribunal -- National Company Law Appellate Tribunal (NCLAT) -- against the NCLT order, which asked for a reply to Invesco’s application by October 7. The company is seeking more time to file its reply in the matter and is also seeking a stay on the proceedings at the tribunal till the matter is decided at the appellate tribunal. 

“The company has moved to National Company Law Appellate Tribunal (NCLAT) in accordance with the due process available under the law. The company has also filed a suit in Bombay High Court to declare that the requisition notice sent by Invesco Developing Markets Fund and OFI Global China Fund LLC is invalid," a company spokesperson said. 

“The company continues to have full faith in the Indian judicial system and will take all the necessary steps that are in the best interests of all its shareholders," he added. 

The Mumbai bench of the National Company Law Tribunal (NCLT) on Tuesday gave time till October 7 to Zee Entertainment Enterprises to file its reply to the top shareholder Invesco Developing Markets Fund's application seeking an EGM. 

Zee had argued that it should be given enough time to reply to the application because it was under the impression that the arguments put forth by Invesco were for an ad-interim relief and not for the final disposal of the matter.

But the tribunal said the matter of the dispute is simple - whether the extraordinary general meeting (EGM) requisition is valid or not and it cannot give Zee Entertainment Enterprises 'weeks and weeks’ of time for filing its reply to the same. 

"Orders cannot be passed with an opportunity of filing a counter... and we are of the view that minimum opportunity time should be given," the tribunal, comprising Bhaskara Pantula Mohan and Narendra Kumar Bhola, said in an oral order.

US-based Invesco, on September 30, had moved a petition seeking convening of the EGM, removing the company's Chief Executive and Managing Director Punit Goenka as well as two other directors, and reconstituting the board with the appointment of six new directors.

Zee Entertainment Enterprises' counsel argued at the tribunal that the application moved by Invesco Developing Markets Fund and OFI Global China Fund LLC should be dismissed on the grounds that they are seeking a final relief in the matter in the garb of an ad-interim relief, which can’t be granted without the full hearing or at the interim stage. Zee's counsel also argued that the tribunal cannot grant a mandatory ad-interim injunction in the present case because that may result in an alteration of the status quo.

This comes after Invesco on Monday asked the tribunal to pass a “mandatory order” directing Zee to call for an EGM as requisitioned by it. Invesco also sought the appointment of a retired high court judge, under whose chairmanship the EGM can be held.

Zee has opposed the application of Invesco asking NCLT to direct the company to hold an extraordinary general meeting (EGM) on jurisdiction issues. It has also moved the Bombay High Court seeking relief on the grounds that the requisition notice of Invesco Developing Markets Fund and OFI Global China Fund LLC is invalid, unlawful, and cannot be legally carried and implemented. Further, it has said in its petition before the high court that the NCLT cannot decide on the validity of the requisition notice and only the high court can decide on the matter.

The global funds have argued that the validity of the requisition notice can be judged on numerical and procedural grounds. Apart from that, the court cannot sit in judgment of the legality of the requisition notice. The validity of the requisition only depends on whether the shareholder has 10 per cent shareholding or not. And, whether the purpose or objective of the EGM is beyond the purview of judicial scrutiny or not.