A day after the Securities Appellate Tribunal (SAT) gave no interim relief to Zee Entertainment promoter Punit Goenka against the confirmatory order of the Securities and Exchange Board of India (Sebi) issued on August 14th, the National Company Law Appellate Tribunal (NCLAT) has sought its response to an appeal filed by IDBI Bank pertaining to an insolvency plea against the company.
IDBI Bank had challenged the order of the National Company Law Tribunal (NCLT) from May, refusing to admit Zee to insolvency resolution. The appellate tribunal on Thursday issued a notice to Zee and granted it two weeks time to file its response to the bank’s appeal. The case will now come up for hearing on October 11.
The matter pertains to a loan default by Essel Group’s Siti Networks, where Zee was a guarantor. The loan was to the tune of Rs 150 crore, which was given to Siti Networks under the Debt Service Reserve Account Guarantee Agreement (DSRA). However, Siti failed to honour the agreement, resulting in a Rs 83 crore shortfall, IDBI had said when moving the NCLT earlier this year.
During the hearing on Thursday, senior advocate Abhishek Manu Singhvi, who appeared for Zee, argued that IDBI had invoked the guarantee during the pandemic, when the government had mandated that no insolvency process could be initiated for any default arising on or after March 25, 2020, for a period of one year.
Appearing for IDBI Bank, senior advocate Ramji Srinivasan argued that the default had arisen before the pandemic and the provision suspending initiation of insolvency would not apply to the present case.
Zee is in the process of merging with Sony after receiving NCLT approval for the same. However, persistent legal disputes have marred the process so far, with Zee’s legal troubles far from over after the NCLAT order on Thursday, legal experts said. A Zee Entertainment spokesperson declined comment on the issue.
Zee, has ironically, settled its disputes with a few financial and operational creditors including IndusInd Bank and the Indian Performing Rights Society (IPRS) in the past.
IDBI Bank, on the other hand, had been seeking initiation of insolvency proceedings against Zee since December last year over Siti Networks dues. Goenka had appealed against IDBI Bank’s plea in the NCLT. In February this year, NCLAT had stayed the order directing the initiation of insolvency proceedings against the media company.