Tanya Gupta
Published on: March 12, 2022 at 15:53 IST
The Bombay High Court reserved its Verdict in the Appeal filed by Zee Entertainment Enterprises Limited’s (Zee) Largest Shareholder Invesco Developing Markets Fund, granting an Interim Injunction in Favor of Zee in an Ongoing Conflict between these Two Parties.
About the Case
On September 11, 2021, Invesco put out a Requisition to hold an Extraordinary General Meeting (EGM).
Invesco wanted to add new Directors to the Board simultaneously, it wanted to Remove 3 Directors from the Board among which was Managing Director, Chief Executive Officer.
Zee refused, hence, Invesco Appealed before National Company Law Tribunal (NCLT) in Mumbai. The Court ordered Zee to follow the Requisition.
The Order herein Challenged was passed in October 2021, seeking to declare that Requisition notice for Replacing the Chief Executive Officer (CEO) namely, Puneet Goenka was Illegal and Invalid.
The Order herein was Challenged by Invesco in Appeal which was heard extensively by Division Bench of Justices Milind Jadhav and SJ Kathawalla.
Following Issues were Raised by Senior Advocate Janak Dwarkadas on Behalf of Invesco:
- That the High Court had no Jurisdiction to Entertain a Suit as Section 430 of the Companies Act ousted Civil Court Jurisdiction for Matters within the Domain of the National Company Law Tribunal (NCLT);
- That the Board is supposed to Leave Things to the Wisdom of the Shareholders at a General Meeting.
- That as per Section 100 of the Companies Act, it was mandatory for the Board to call for a Shareholders Meeting;
- Zee’s suit was Premature, they could have Challenged the Resolutions passed in the Meeting;
- That the Board of Directors could not sit in Judgment over any matter in consideration for which the Meeting is Requisitioned.
Following Statements were submitted by Senior Advocate Aspi Chinoy on the Behalf of Zee:
- That if one could Challenge Resolutions, the Requisition leading to Meetings could also be Challenged in Civil Suits;
- Not obtaining Prior Approval from the Ministry of Information and Broadcasting (MIB) to Remove the Present Managing Director Punit Goenka could lead to the Broadcaster losing its License;
- That the Order under Challenge was by Law;
- That an Independent Director could not be Appointed by the Shareholders directly;
- That having an Executive Director was crucial for such Approval; after removing Goenka, the Executive Director would not be left on the Board which is against the Statutory Requirement.
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