[Invesco v Zee] Bombay High Court sets aside interim injunction on requisition notice

A Division Bench of the Bombay High Court on Tuesday set aside an order of the single-judge granting interim injunction in favour of Zee Entertainment Enterprises Limited in an appeal filed by its largest shareholder, Invesco Developing Markets Fund, in the ongoing dispute between the two entities..While doing so, a Bench of Justices SJ Kathawalla and Milind Jadhav held, “We conclude that the proposed resolutions contained in the Requisition are neither illegal nor incapable of being lawfully implemented and consequently, set-aside all of the Ld. Single Judge’s findings in this regard on all counts. The appeal is accordingly disposed of.”At the request of counsel for Zee, the Bench ordered that status quo be maintained in the case, for a period of three weeks..The genesis of the dispute was a requisition put out by Invesco on September 11, 2021 to the Zee Board of Directors to hold an extraordinary general meeting (EGM) on the ground that it felt that the company was not running as smoothly as desired.It required certain new directors to come on the Board in order to safeguard its interests. Invesco wanted to remove three directors from the Board, including Managing Director and Chief Executive Officer, Punit Goenka.When Zee refused to respond to the requisition, Invesco moved an application before the National Company Law Tribunal (NCLT) in Mumbai, which directed Zee to consider the requisition in accordance with law.The order under challenge was passed in October 2021 by a single-judge of the High Court, in the suit seeking a declaration that the requisition notice by Invesco seeking an EGM for replacing Goenka was illegal and invalid. Invesco challenged this order and the verdict was reserved by the Division Bench earlier this month. .Senior Advocate Janak Dwarkadas raised the following contentions on behalf of Invesco:That as per Section 100 of the Companies Act, it was mandatory for the Board to call for a shareholders meeting;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 NCLT;Zee’s suit was premature, given that they could have challenged the resolutions passed in the meeting.Senior Advocate Aspi Chinoy submitted the following on behalf of Zee:That a requisition under Section 100 of the Companies Act did not confer any special powers upon NCLT; matters pertaining to the illegality or ultra vires of any action could be challenged before any civil courts, which implied that challenging the NCLT order was not barred;That not obtaining valid permission/approval from the Ministry of Information & Broadcasting (MIB) to remove a director could lead to the broadcaster losing its license;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, there would be no executive director on the Board, which is against statutory requirement..Chinoy appeared alongside Senior Advocates Navroz Seervai, Pesi Modi and Birendra Saraf, and Advocates Prateek Seksaria, Nitesh Jain, Nisha Uberoi, Gautam Chawla, Atul Jain, Adrish Majumder, Vatsala Kumar, Ritika Ajitsaria, Brihad Ralhan, Hitesh Saini and Radhika Seth from Trilegal for Zee.Dwarkadas alongside Senior Advocates Ravi Kadam and Sharan Jagtiani with a team from Dhruve Liladhar & Co including Advocates Gaurav Mehta, Rishika Harish, Kingshuk Banerjee, Bhavik Mehta, Zacarias Joseph, Sonali Aggarwal, Ritvik Kulkarni and Prakruti Joshi appeared for Invesco.[Read order]