Notice issued to ZEEL on IDBI plea
Zee Entertainment Enterprises Ltd (ZEEL) on a plea by IDBI Bank requesting initiation of insolvency proceedings against the company. IDBI’s plea is after the bank is unable to recover unpaid dues of around ₹150 crore. The Tribunal instructed both parties to submit replies and rejoinders, acknowledging that the case requires consideration.
The NCLAT will now hear this matter on 11 October. In this case, IDBI Bank has contested the decision of the National Company Law Tribunal (NCLT) Mumbai bench, dated 19 May, which had denied IDBI’s request to commence insolvency proceedings against ZEEL. This was based on the statutory restriction outlined in section 10A of the Insolvency and Bankruptcy Code (IBC).
Section 10A of the IBC prevents the initiation of insolvency proceedings for defaults that occurred during the covid-19 period, defined as 25 March 2020 to 25 March 2021. ZEEL argued that the guarantee was limited and did not cover the entire debt. According to the NCLT Mumbai Bench order, ZEEL, the corporate guarantor for a loan taken by Siti Networks (the principal borrower of IDBI Bank), had defaulted within the specified period under Section 10A.
However, IDBI Bank contended that the default occurred before the Section 10A period. The bank claimed that the default stemmed from a debt service reserve account (DSRA) guarantee provided by ZEE to secure loans given by IDBI Bank to Siti Networks Ltd, both of which were part of the Essel Group. Earlier, IndusInd Bank had filed an application against ZEE, which was accepted by the NCLT on 22 February.
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