NCLAT defers hearing on IDBI's insolvency plea against Zee for August 31

The National Company Law Appellate Tribunal (NCLAT) has agreed to hear IDBI Bank's plea seeking insolvency proceedings against Zee Entertainment to recover dues of Rs 149.6 crore on August 31.  

The case pertains to the lender's appeal against the National Company Law Tribunal (NCLT) order. In its verdict on May 10, the NCLT noted that it can't entertain IDBI's plea as it was barred under Section 10A of the Insolvency and Bankruptcy Code (IBC).

Section 10A states that no application for initiation of corporate insolvency resolution process (CIRP) can be filed against any debtor by any financial and operational creditor for any default arising on or after March 25, 2020, for a period of one year.

IDBI Bank had filed the insolvency plea before NCLT's Mumbai bench in December 2022.

During the August 17 hearing, appearing for IDBI, senior advocate Ramji Srinivasan argued that the the repayment was not covered under Section 10A.

He also argued that Siti Networks - the principal borrower for whom ZEEL stood as a corporate guarantor, had availed a term loan and a working capital loan. The loan agreement terms mandated Siti to maintain a sum equivalent to two months of repayment of the loan and the guarantor was responsible for maintaining the balance. Since Siti failed to maintain such a balance, they moved against Zee Enterprises to enforce it.

Appearing for ZEEL, senior advocates AM Singhvi and Arun Kathpalia vehemently opposed the tribunal issuing notice in the case.

However, the case was adjourned due to the paucity of time. 

IDBI Bank had moved the NCLAT to challenge the NCLT's May 19 order last month.

On August 11, NCLT approved the merger of Zee Entertainment Enterprises and Culver Max Entertainment (erstwhile Sony Pictures Networks India or SPNI).