The Bombay High Court on Tuesday granted an injunction in favour of Zee Entertainment Enterprises Ltd. in its dispute against Invesco Developing Markets Fund and OFI Global China Fund LLC.
The single-judge bench of Justice Gautam Patel of the Bombay High Court said it has decided to grant an injunction. The detailed order is not available as yet.
The interim order comes as a win for Zee which had moved the high court seeking an injunction against the EGM and declaring the requisition sent by Invesco as “illegal and invalid”.
Last week, the high court had proposed a solution to the parties: that the EGM be called and Zee’s right to contest the validity of the resolutions post the EGM be reserved. Invesco had agreed to the court’s suggestion but Zee’s counsel Gopal Subramanium resisted the proposal saying the board of directors desire “vindication”.
Invesco and OFI Global, together holding a 17.88% stake in the media major, are locked in a dispute with the company’s current board and Managing Director and Chief Executive Officer Punit Goenka. The two funds are seeking to oust Goenka and appoint six new independent directors.
Before the high court, Zee pointed out the legal infirmities which lead the board to reject Invesco’s EGM requisition:
Requirement of prior approval of the Ministry of Information and Broadcasting for any board appointments.
Non-compliance with SEBI’s Listing Regulations that lay down Nomination and Remuneration Committee-led process for appointing independent directors.
Violation of company law that lays down stringent criteria for appointment of independent directors.
Non-compliance with Takeover Code, Competition Act and Zee’s Articles of Association that caps the number of directors.
Invesco had responded saying as per company law, the board “shall” call a meeting if the numerical threshold of 10% is met.
Zee vs Invesco: Story So Far…
On Oct. 2, Zee Entertainment had moved the Bombay High Court against a demand by institutional investors Invesco Developing Markets Fund and OFI Global China Fund LLC seeking an EGM.
Besides the high court, the dispute is also playing out before the National Company Law Tribunal. Invesco had approached the NCLT, seeking the EGM. But Zee’s board rejected the requisition.
The case came up for hearing before the NCLT last week which adjourned the hearing after the high court reserved its order on Zee’s plea.
