The Bombay High Court on Tuesday allowed Invesco Developing Markets Fund's appeal against the single-judge's order, according to lawyers involved in the matter.
A division bench of Justice SJ Kathawalla and Justice Milind Jadhav, while setting aside the single-judge order on all counts, said Invesco's proposed resolutions are not illegal and capable of being enforced.
The detailed copy of the judgment is awaited. The division bench had reserved its judgment two weeks ago.
On Oct. 26, a single-judge bench of Justice Gautam Patel had granted an injunction in favour of Zee Entertainment Enterprises Ltd. restricting Invesco to act on its September requisition to call an extraordinary general meeting.
Invesco and OFI Global China Fund LLC, both foreign institutional investors that together hold a 17.88% stake in the media company, are locked in a dispute with Zee Entertainment'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 via an EGM.
In its appeal, Invesco had made three key points:
The high court did not have sufficient jurisdiction under company law to grant a stay on the EGM requisition. It's the company law tribunal that is empowered to decide on this matter.
Shareholders have an absolute right to call an EGM, Invesco had argued.
The right of the shareholders to remove directors at a requisitioned general meeting is not affected by the Ministry of Information and Broadcasting's regulations or approval.
Zee had responded saying:
Jurisdiction of the National Company Law Tribunal is limited under the Companies Act. It does not have the statutory authority to decide on questions regarding the requisition of an EGM.
Acting on the requisition to remove Goenka without prior MIB clearance would result in Zee Entertainment losing its broadcasting licence.
Independent directors cannot be appointed in violation of the Companies Act and SEBI regulations, which specify a procedure for the appointment and removal of a director.
Goenka's lawyers had contended that there cannot be a time lag between directors' appointments and MIB's approval. And, that, removing Goenka from the company board would violate SEBI's listing regulations.
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