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Informist, Monday, Apr. 7, 2025

 

--NCLAT upholds NCLT order rejecting IDBI Bk insolvency plea against Zee Ent

 

NEW DELHI – The National Company Law Appellate Tribunal on Monday upheld the 2023 order of the National Company Law Tribunal's Mumbai bench rejecting IDBI Bank Ltd.'s insolvency plea against Zee Entertainment Enterprises Ltd. for an unpaid amount of INR 1.50 billion. The dispute arises from a guarantee provided by Zee Entertainment to the lender on a loan to Essel Group subsidiary Siti Networks, and its alleged failure to perform its duties as guarantor.

 

The appellate tribunal said IDBI Bank can file a fresh insolvency application in the Mumbai tribunal for any default by Zee Entertainment which does not come under the Section 10A period under the Insolvency and Bankruptcy Code, 2016. The government had introduced Section 10A in the Insolvency and Bankruptcy Code, 2016 which bars the filing of any application under Sections 7, 9 and 10, for defaults committed on or after Mar. 25, 2020 till Mar. 25, 2021.

 

In May 2023, the Mumbai bench of the National Company Law Tribunal had dismissed IDBI Bank's insolvency petition against Zee Entertainment, saying the alleged lapses by the latter were covered under the exemption granted under Section 10A of the 2016 Code.

 

IDBI Bank had said there was default in the debt service reserve account obligations by the borrower and the corporate guarantor and even before the invocation dated Mar. 5, 2021, which was relied on by the tribunal for holding the application barred by time, there was communication regarding the default. In May 2023, the tribunal had said that Zee Entertainment had committed the default in relation to its obligation to maintain two quarter interest in the principal borrower debt service reserve account during the period specified in Section 10A of the Code. The Mumbai tribunal had said the application by IDBI Bank was also not maintainable on the ground that it was not in accordance with the intent and purport of the 2016 Code. 

 

At 1103 IST, shares of Zee Entertainment Enterprises were down 8.5% at INR 95.90 on the National Stock Exchange, while those of IDBI Bank Ltd were down 6.2% at INR 73.57.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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