Zee-Sony merger: IDBI Trusteeship files appeal at NCLAT against Subhash Chandra

The IDBI Trusteeship Services (ITSL) has filed an appeal at the National Company Law Appellate Tribunal (NCLAT) against Subhash Chandra, who serves as the chairperson of Essel Group.

The hearing for this case took place on December 1. The hearing was postponed because the case was moved to Chairperson Ashok Bhushan's bench.

The appeal challenges the order of NCLT Mumbai which dismissed its claim and approved the merger of Zee Entertainment Enterprises (ZEEL) and Sony. IDBI Trusteeship's objection to the merger was turned down by the NCLT.

IDBI trusteeship argued at the NCLT that it serves as the debenture trustee for 425 debentures issued by Essel Infraprojects (EIL) for specific schemes.

As per the NCLT ruling, Chandra provided a personal guarantee in 2019 in favour of IDBI trusteeship, ensuring repayment obligations related to the debentures. Nevertheless, the trusteeship company asserted that Chandra did not fulfill his responsibilities under the personal guarantee, thereby positioning him as a creditor. Additionally, the trusteeship company demanded an amount exceeding Rs 500 crore from Chandra.

ZEEL opposed this objection contending, "IDBI Trusteeship is admittedly not a creditor of Zee. It has no contractual or legal privity with Zee. Therefore, it has no locus (right) to object to the scheme (merger)."

Following this, NCLT dismissed the objection saying, "Having failed in ensuring recovery of their alleged dues from other entities of Zee through other legal proceedings are opposing this scheme of Zee as a last resort for their recoveries."

Then, IDBI Trusteeship appealed against this order of NCLT.

On August 10, NCLT granted approval for the merger between Zee and Sony. This decision clears the path for the establishment of a $10-billion media conglomerate in the country. Additionally, the tribunal rejected all objections related to the merger.

In December 2021, an accord was reached between Zee and Sony to merge their businesses. Following this, both entities sought approval for the merger from the tribunal, having previously secured necessary permissions from the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and other regulatory bodies, including the Competition Commission of India (CCI) and the Securities and Exchange Board of India (SEBI).

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