NCLAT rejects IDBI Bank’s plea against Zee

New Delhi

The National Company Law Appellate Tribunal (NCLAT) has dismissed IDBI Bank’s petition to start insolvency proceedings against Zee Entertainment Enterprises Limited (ZEEL). The decision supports the earlier ruling by the National Company Law Tribunal (NCLT), Mumbai, which also rejected the plea.

The case revolves around a Rs 150 crore loan given by IDBI Bank to Siti Networks as working capital. Zee had acted as a corporate guarantor for the loan. Siti Networks failed to maintain the required Debt Service Reserve Account, which led to a default.

IDBI Bank then asked Zee to pay Rs 61.97 crore in March 2021 and claimed the total default had reached Rs 149.60 crore. However, the tribunals noted that the default occurred during the Covid-19 pandemic, a period protected under Section 10A of the Insolvency and Bankruptcy Code (IBC).

Section 10A blocks any insolvency action for defaults that happened between March 25, 2020, and March 25, 2021. Since IDBI’s claim falls within this period, the tribunals ruled that the case cannot proceed.

The NCLAT clarified that IDBI Bank could file a new case if any default happened outside the protected timeframe.

Earlier, IndusInd Bank had also filed a similar case against Zee. While NCLT accepted that case in February, NCLAT paused the order in March. Zee later settled the dispute with IndusInd Bank.

Zee has argued that both banks’ claims are invalid because the guarantees were triggered during the Covid-19 relief period, which protects companies from insolvency actions linked to that timeframe.