Supreme Court to Review IDBI’s Plea Over Zee Insolvency Rejection

New Delhi

The Supreme Court has agreed to review a petition filed by IDBI Trusteeship Services challenging the National Company Law Appellate (NCLAT) orders that rejected the initiation of insolvency proceedings against two promoter companies of Zee Entertainment Enterprises Ltd (ZEEL). A bench led by Chief Justice D.Y. Chandrachud issued a notice in this regard and sought responses from Direct Media Distribution Ventures and Cyquator Media Service within four weeks.

In September of this year, the NCLAT dismissed the plea by IDBI Trusteeship Services Limited (ITSL), citing Section 10A of the Insolvency and Bankruptcy Code (IBC), 2016, as a bar to the application. Section 10A prohibits the filing of an application for the initiation of corporate insolvency resolution proceedings against any debtor for any default arising on or after March 25, 2020, for a one-year period.

The matter stems from ITSL acting as the Debenture Trustee for Essel Infraprojects Limited in 2015, where Essel proposed to issue 425 non-convertible debentures. Essel failed to repay the debentures, leading ITSL to file an application under Section 7 of the IBC in 2022. The National Company Law Tribunal rejected the application, citing Section 10A.

The Supreme Court is scheduled to further hear the case in January next year. Additionally, ITSL has lodged an appeal with the NCLAT against Subhash Chandra, Chairperson of the Essel Group, challenging the NCLT Mumbai's approval of the ZEEL and Sony merger. The appeal claims Chandra failed to fulfill his obligations under a personal guarantee and owes Rs 535 crore to ITSL, making him a creditor in the matter.