As the feud continues between Zee and Invesco, appellate body NCLAT on Thursday directed the National Company Law Tribunal (NCLT) to give reasonable opportunity to the media major to reply to Invesco's plea for holding a meeting of shareholders, and also remarked that the tribunal made an "error" by not providing sufficient response time.
With the order capping a day of fast legal developments at the NCLAT as well as the NCLT within a span of a little over an hour, the spat between Zee Entertainment Enterprises Ltd (ZEEL) and minority shareholder Invesco will now come up for hearing before the NCLT on Friday.
Invesco is seeking the ouster of ZEEL MD and CEO Punit Goenka and appointment of six new directors on its board.
After announcing in the afternoon that it will pass an order on a petition filed by ZEEL seeking more time to respond to Invesco's plea for holding the shareholders' meet, the Delhi-based principal bench of the National Company Law Appellate Tribunal (NCLAT) released its 15-page judgement at around 7.30 pm.
Interestingly, the NCLAT's announcement came less than an hour before the National Company Law Tribunal (NCLT) was to start the scheduled hearing on the Zee-Invesco matter.
The NCLT adjourned the matter to Friday, saying it will wait for the appellate tribunal's order related to the matter.
While the NCLT is hearing a petition filed by Invesco demanding convening of the extraordinary general meeting (EGM), the company moved the NCLAT seeking more time reply to the petition.
ZEEL moved the appellate tribunal after the NCLT on October 5 (Tuesday) directed the company to reply to Invesco's petition by October 7 (Thursday).
In the 15-page order, the appellate body said the NCLT committed an "error" by not granting reasonable time to ZEEL to reply to Invesco's plea.
The two-member NCLAT bench said that it was a complete violation of NCLT rules and principles of natural justice and directed the Mumbai bench of the NCLT to proceed further after hearing both parties.
"... we are of the opinion that reasonable and sufficient opportunity should be given to the appellants for filing a reply," the order said.
"After hearing both the parties, the learned NCLT should proceed further. The appeal is disposed of accordingly," said the two-member NCLAT bench comprising Justice Jarat K Jain and Alok Srivastava.
However, the NCLAT in its order did not mention how much time should be given to ZEEL and other petitioners to submit the reply.
The NCLAT also observed that the minority shareholders are seeking final reliefs of calling an EGM of the company at an admission/interim stage which was "impermissible".
Therefore, ZEEL and other parties sought time for filing a reply and granting such a short span of less than two days has in effect denied the appellant an opportunity to effectively present its case, thereby grossly violating principles of natural justice.
"It is also important to mention that Rule 37 of NCLT Rules provides a grant for reasonable and sufficient time to file a reply/counter," the NCLAT said.
The ruling came on a petition filed by ZEEL seeking more time to file its reply over the requisition of minority shareholders -- Invesco and OFI Global China Fund -- to convene the EGM.
The petition was filed by ZEEL, its independent directors and Registrar and Share Transfer Agent.
A ZEEL spokesperson said the decision of the NCLAT justifies company's complete faith in the Indian judicial system.
"NCLAT has taken cognizance of our plea and has reinforced the principles of natural justice, granting us a reasonable opportunity to be heard.
"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," the spokesperson said.
Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) along with OFI Global China Fund LLC hold 17.88 per cent stake in ZEEL.
The minority shareholders have moved a petition before the NCLT 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.
Last week, ZEEL had moved the Bombay High Court against the petition of the minority shareholders.
Besides, ZEEL board had rejected the minority shareholders' demand and termed the requisition as "invalid and illegal".
Amid the spat, Zee Chairman Emeritus Subhash Chandra on Wednesday asked Invesco to make an open offer and take over the company if it wants, and also said that the investment firm was acting in a clandestine manner.
Last month, ZEEL and Sony Pictures Networks India (SPNI) had announced their mergers, which will create the country's largest media company.
The merged entity, in which SPNI's parent company Sony Pictures Entertainment would infuse $1.575 billion, will be a public listed company in India.