afaqs! news bureau

SC affirms HC decision, directs Siti Networks' loan default case to arbitration: Report

Siti Networks secured a loan from Aditya Birla Finance in 2017, backed by Zee as the guarantor.

Supreme Court has upheld the Delhi High Court's decision on January 16, directing the Rs 150 crore dispute between Aditya Birla Finance and Siti Networks to arbitration, as reported by CNBC. The high court had earlier appointed Justice LN Rao, a former Supreme Court judge, as the exclusive arbitrator.

Aditya Birla Finance claims that the Essel Group owned Siti Networks owes Rs 134 crore, plus interest to the company. This escalates trouble for Zee as it had agreed to be the guarantor for the loan.

SC has cited its recent ruling, asserting that even non-signatories to an arbitration agreement can be subject to it under the 'Group of Companies' doctrine. It has directed Zee to present its concerns to the arbitrator.

Meanwhile, Aditya Birla Finance, the lender, asserts that it reduced the interest rate on the loan from 16% per annum to 13%. This adjustment was done on a condition that Siti would decrease the outstanding loan to Rs 75 crore before 2018, with Zee, serving as the guarantor for the loan.

On the other hand, Zee claims that it acted as the corporate guarantor, not the primary debtor in Siti’s loan.

Have news to share? Write to us