The IDBI Ltd. bank headquarters in Mumbai
| Photo Credit:
Indranil Aditya
National Company Law Appellate Tribunal (NCLAT) on Monday dismissed IDBI Bank Ltd.’s petition against ZEE Entertainment Enterprises Ltd seeking insolvency proceedings against the Company, upholding the decision pronounced by National Company Law Tribunal (NCLT), as per a release by Zee’s Corporate Communications person.
While the bank is free to file a fresh insolvency plea for defaults beyond the period stipulated under Section 10A of Insolvency and Bankruptcy Code (IBC), 2016, Chairperson Justice Ashok Bhushan and Technical Member Barun Mitranoted that the same provision bars any initiation of corporate insolvency resolution process (CIRP) against any debtor for default arising on or after March 25, 2020, for a period of one year, owing to the Covid-19.
“We are of the view that although order impugned of the adjudicating authority needs to be affirmed, but liberty need to be given to the appellant, if so, advised to file a Section 7 application for default of corporate debtor subsequent to 10A period i.e., a default subsequent to March 24, 2021,” said the court order.
On August 3, 2012, Zee had agreed to be a corporate debtor of a debt service reserve account (DSRA) for working capital facilities extended by IDBI Bank to Siti Networks Limited. Siti’s account became a non-performing asset on December 29, 2019. However, the bank invoked Zee’s guarantee in March 2021, demanding ₹61.97 crore. In response, Zee said its obligation was limited to interest payments on the original ₹50 crore facility and said the recalling of the entire facility in February 2021 dismissed any ongoing DSRA maintenance obligations. Following this, IDBI Bank moved the NCLT against ZEEL.
However, even the NCLT held that the bank’s claim was unsustainable as ZEEL’s liability under the guarantee agreement was limited to maintaining two quarters’ interest on the original sanctioned limit of ₹50 crore, not the entire outstanding amount. Further, it said the demand notice issued by the bank also fell within the stipulated Covid-moratorium under Section 10A.
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Published on April 7, 2025
