Setback for Zee in battle with Invesco: Bombay High Court allows EGM plea to oust CEO Punit Goenka

In a setback for Zee Entertainment Enterprises (Zee), the Bombay High Court on Tuesday allowed an appeal filed by Invesco Developing Markets Fund against a single-judge order granting interim injunction on holding an extraordinary general meeting (EGM) to remove CEO Punit Goenka.

Invesco is the single-largest shareholder of Zee with a 17.88% stake.

A division bench of Justices SJ Kathawalla and Milind Jadhav, while quashing and setting aside the single-judge order of October 2021, directed that status quo be maintained for three weeks, to enable Zee to appeal against the order in the Supreme Court.

A Zee spokesperson said the company will take “required steps in accordance with the law” and in the best interest of its stakeholders. “We respect the decision taken by the Bombay High Court. While we are awaiting the written order, the company has full faith in the Indian judicial system and will continue to take the required steps in accordance with the law; and most above, in the best interest of its stakeholders,” the  spokesperson said.

Legal observers said Zee will certainly appeal against the order. However, the relief which it is seeking — not convening an EGM – can only come if the SC stays the HC’s order till it disposes of the matter.

In the event of no stay order from the apex court, the National Company Law Tribunal’s Mumbai bench can continue hearing the case. Invesco had earlier moved the tribunal.

The fight between Zee and Invesco started when on September 11 last year the latter issued a requisition letter asking Zee’s board to hold an EGM to evict certain directors, including its CEO and managing director Punit Goenka, alleging breach of corporate governance norms.

Invesco, along with its subsidiary OFI Global China Fund, had sought induction of six of its nominees on Zee’s board. Invesco had raised concerns on the media firm’s proposed merger with Sony Picture Networks India, terming it “unfairly” favouring the founding family.

Zee’s board, later in its meeting on October 1, termed the request “invalid and illegal”.

On its part, Zee rejected the request, citing “legal infirmities” and later on October 2 moved the Bombay HC asking it to declare the requisition “illegal”. A single-judge bench in October 2021 granted an injunction against holding of the EGM.
The development comes at a time when Sony and Zee Entertainment are in the process of merging their businesses. The merger would need the approval of the shareholders of the company.

In September, Zee’s board had also approved a merger of the company with rival Sony Pictures Networks India (SPNI), a subsidiary of Japan’s Sony Corporation. If the deal gets regulatory and shareholder approvals, it would create the country’s largest media and entertainment company.