Temporary relief for Zee as HC admits appeal against selling of shares worth Rs 740M

The Delhi High Court in an interim relief to Zee Entertainment Enterprises Ltd stayed IDBI Trusteeship and Franklin Templeton from selling or transferring the company's shares worth Rs 740 million, after the court admitted an appeal filed by Zee.

A division bench of the high court presided by Justices Rajiv Sahai Endlaw and Asha Menon admitted the appeal challenging the order passed by the single judge bench of the court. The orders were passed while the two judge bench was hearing an application filed by Cyquator Media Services Pvt Ltd, the holding company of Zee Entertainment.

Advocate Vijay Aggarwal had filed the plea seeking the stay on invoking pledge on the shares.

During the course of hearing, senior advocate Neeraj Kishan Kaul argued that the interim measure sought by Cyquator was denied in the order of the single judge, following the statutory provisions which are unambiguous.

"Any interference with the sale by the respondent no. 1 (IDBI Trusteeship Services Ltd) of the pledged shares would affect the investors in the mutual fund on a day to day basis and may also result in irreparable injury inasmuch as if the price of the said shares were to fall, the security created by way of pledge of the shares would cease to exist and/or diminish," Kaul told the court.

The appellant through its counsel advocate Vijay Aggarwal submitted that severe prejudice would be caused to Cyquator if the shares of Zee Entertainment are sold in open market during the present market conditions.

The court has now posted the matter for further hearing on July 13.

The plea filed by Cyquator has sought the setting aside of the single bench order of the high court passed on July 3.

It also sought the court's directions to restrain IDBI Trusteeship Services Ltd from invoking the pledge or acting upon it, including by creating third party rights in the pledged shares for a period of six weeks.

"The Impugned Order fails to appreciate that in the present situation of COVID-19, all parties need to act fairly and reasonably and it would be ex facie wrong to put the Appellant (Cyquator) to prejudice alone when in fact a balanced outcome is achievable by waiting for 4-6 weeks," the plea said.

It added that the Impugned Order failed to consider that while there may have been no urgency qua the invocation of the corporate guarantee, the pledge invocation was imminent and as such relief ought to have been granted at least vis-A-vis the Pledge Invocation Notice if not the Corporate Guarantee Notice.