[Zee v. Invesco] Invesco moves Bombay High Court against interim injunction

Invesco Developing Markets Fund, the largest shareholder in Zee Entertainment Enterprises Limited, has moved the Bombay High Court against a single-judge order granting an interim injunction in favour of Zee in its ongoing dispute with the broadcaster..The order under challenge had restrained Invesco and OFI Global China Fund from taking any action in furtherance of their September 2021 requisition notice to Zee to hold an extraordinary general meeting (EGM)..Senior Advocate Janak Dwarkadas submitted today on behalf of Invesco that all contentions aside, as per Section 100 of the Companies Act, it is mandatory for the Board to call a meeting of the shareholders. He elaborated on the following grounds:.Jurisdiction of civil courts to hear matters pertaining to companies act.Invesco's primary contention was that the Board cannot sit in judgment over any matter in consideration for which the meeting is requisitioned, which is also the reason why the Board is supposed to leave things to the wisdom of the shareholders at a general meeting..Dwarkadas submitted that the High Court had no jurisdiction to entertain the suit as Section 430 of the Companies Act ousted civil court jurisdiction for matters within the domain of the National Company Law Tribunal (NCLT). He contended that the only time a civil court could be approached was if there was a meeting directed by the NCLT as per the requisition and if the validity of the resolutions passed in the meeting were challenged. In this light, the suit filed by Zee was premature, he argued..The Senior Advocate further claimed that the single-judge order was passed without considering the principles laid out in the judgment of Cricket Club of India & Ors v. Madhav Apte & Ors, which stated that a meeting has to be called for even if it is requested for an illegal requisition..No interference in rights of the shareholders to call EGM.Reiterating Section 100(2), Dwarkadas stated that shareholders holding 10% or more of the paid-up share capital are entitled to requisition an EGM for consideration of matters set out in such requisition. “This is a paramount right of shareholder in corporate democracy,” Dwarkadas stated.He argued that the validity of a requisition issued under Section 100(2) can be tested only on its compliance with the numerical and procedural requirements..He added that if the legislature wanted to alter or expand the interpretation of the word “valid,” it had a “golden opportunity” while enacting the Companies Act 2013 and could have done so in the manner interpreted by the single-judge..The order under challenge was passed in October 2021, in the suit seeking a declaration that the requisition notice by Invesco seeking an EGM for replacing Punit Goenka (Managing Director and CEO of Zee) was illegal and invalid..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 EGM on the grounds 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 interest. Invesco wanted to remove three directors from the Board, including Goenka..When Zee refused to respond to the requisition, Invesco moved an application before the NCLT in Mumbai, which directed Zee to consider the requisition in accordance with law.