Amid the escalating spat between news and entertainment major Zee Entertainment Enterprises Ltd (ZEEL) and Japanese entertainment behemoth Sony Group, the ZEE board at its meeting today decided to move the National Company Law Tribunal (NCLT), Mumbai, seeking its intervention to implement the merger.

ZEE says it has also started "appropriate legal action" to contest the claims of Sony's India entity Culver Max Pvt Ltd (earlier known as Sony Pictures Networks India) and Bangla Entertainment Pvt Ltd (BEPL) in the "arbitration proceedings" before the Singapore International Arbitration Centre (SIAC). ZEE has also issued a reply to Culver Max and BEPL, specifically denying any breach of its obligations under the merger co-operation agreement (MCA) and reiterating it has complied with all its obligations in "good faith".

"The Company has denied that Culver Max and BEPL are entitled to terminate the MCA and the claim for termination fee is legally untenable and has no basis whatsoever. The Company asserted that Culver Max and BEPL are in default of their obligations to give effect to and implement the Scheme, sanctioned by the Hon’ble National Company Law Tribunal. The Company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the Merger Scheme, sanctioned by the Hon’ble National Company Law Tribunal. The Company has reserved all its rights in this regard," ZEE says via a stock exchange filing.

ZEE shares closed 6.7% up at ₹166.35 on the BSE today after plunging 30% to hit a lower circuit on Tuesday as Sony's back out from the $10-billion merger deal prompted a sell-off amid the stock downgrade by several brokerages.

Sony put an end to two-year-long merger negotiations with ZEE by officially sending a termination letter about the $10 billion mega-merger deal on Monday. The major reason cited behind the termination of the much-hyped deal was the inability to fulfil the merger agreement. "Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline," the company said.

After terminating the deal, Sony also sought a fee of $90,000,000 from ZEE on account of “alleged breaches” of the agreement, invoking arbitration and seeking interim reliefs.

In response, ZEE said it was weighing all "legal options". The Punit Goenka-led company also denied “all the assertions raised by Culver Max and BEPL on the alleged breaches”, including its claims for “termination fee”.

ZEE said the efforts and steps taken by it were in line with the merger agreement. “ZEEL held several deliberations and good faith negotiations with Culver Max and BEPL, to consider an extension of the merger completion timeline, that did not materialise."

The company also said that Punit Goenka, MD & CEO of ZEEL, was “agreeable” to step down in the interest of the merger. Goenka, in his response to the development, said he thought it was a "sign from the Lord". "As I arrived at Ayodhya early this morning for the auspicious occasion of Pran Pratishtha, I received a message that the deal that I have spent 2 years envisioning and working towards had fallen through, despite my best and most honest efforts. I believe this to be a sign from the Lord. I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders," he posted on the microblogging platform X.

The $10-billion deal was announced in December 2021, which could have created the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing legal battles with capital markets regulator SEBI.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.