The breakdown saga of the merger talks between Zee and Sony seems far from over as the two parties are now engaging in a litigation battle.

A day after Zee informed BSE that the Singapore International Arbitration Centre (SIAC) had deniedSony’s pleato restrain Zee from approaching the National Company Law Tribunal (NCLT) for enforcement of the merger agreement, Sony expressed its disappointment and said it would continue to fight in the SIAC its right to terminate the merger agreement.

As the tussle continues in the courts of law, exchange4media spoke to legal experts to understand if Sony could take any other legal option to restrain Zee from seeking legal intervention for enforcement of the merger agreement or whether the former would be liable to go ahead with the merger ifNCLTallowed Zee’s plea.

Legal experts said that at the end of the day, “mergers cannot be enforced if one party is unwilling”.

“NCLT cannot enforce a merger when one of the parties is unwilling. Like marriages, mergers cannot be enforced,” said an expert.

On the issue ofZee seeking compensation, advocate Rajiv Sharma, Partner, Singhania & Co, said: “Even if Sony did not have any valid grounds to proceed with the merger, Zee could at best ask for compensation, in accordance with the merger cooperation agreement signed on December 22nd, 2021. In order to seek compensation, Zee would have to obtain it through arbitration.”

“No court of law can enforce a merger,” he added.

As per Sameer Jain, Managing Partner, PSL Advocates & Solicitors, Sony can defend itself in NCLT where Zee is seeking relief.

“After the decision by SIAC Emergency Arbitrator, Sony can still defend Zee’s petition in the NCLT. Zee has approached the NCLT for enforcement of the merger agreement, Sony’s option includes defending that petition before the NCLT,” he said, adding that Sony will also have the option to file an appeal before NCLAT against the decision of NCLT.

Speaking of how long it takes for such cases to be disposed of by NCLT, Jain said that it may take a couple of months.

“There is no set timeline. However, looking at the normal timelines before NCLT, it may take a couple of months before NCLT can finally decide Zee’s plea,” he said.

According to Delhi High Court advocate Ekta Rai, “The timeline for disposal of the application before NCLT-Mumbai is hard to predict, especially considering that Sony will certainly contest the application. In the end, it will come down to adjudication on the merits of the case.”

She also said that in the past the same court had passed the order of merger and presently Zee is seeking enforcement of the same order.

“However, formerly, the issues that delayed the merger pertained to the credibility ofPunit Goenkaand several financial obligations towards various banks that Zee was expected to fulfil. Sony was not a party to these issues.

“This time around, the issue is a breach of contract as claimed by Sony itself. Procedurally, the Court will have to hear the arguments of Sony on the grounds of breach. Only once convinced, that there has not been any material breach of contract, can NCLT pass the order of executing the merger,” Rai said.

In a statement issued on Monday, Sony said, “We are disappointed in the decision by the Singapore International Arbitration Centre (SIAC). This decision is only a procedural one, ruling only as to whether Zee Entertainment would be permitted to pursue its application with the NCLT.”

It also said that it will vigorously fight it out in the SIAC, Sony’s right to terminate the merger agreement.

“We will continue to vigorously arbitrate the matter in Singapore in front of a full SIAC tribunal and pursue Sony's right to terminate the merger agreement and seek a termination fee and other remedies.  We remain confident in the merits of our position in both Singapore and India,” said the Japanese company’s Indian arm.

ZEEL had on Sunday informed the stock exchanges about the SIAC’s decision to deny Sony’s plea due to lack of jurisdiction to pass such an order.

Sony had terminated the much-awaited $10 billion merger with ZEEL and initiated arbitration against the company seeking a termination fee of $90 million. ZEEL, on the other hand, approached the NCLT seeking enforcement of the merger and other remedies for the termination by Sony.