Mumbai The Delhi High Court, in an order passed on Tuesday, clarified that it has not restrained IndusInd Bank from taking Zee Entertainment to the bankruptcy court. This clears the decks for the private lender to initiate insolvency proceedings against the media company, which is owed by Citi Networks, a unit of the Essel Group.
A bench headed by Justice Jyoti Singh said, “It is clarified that this Court has never barred the Respondent-Bank from initiating or maintaining proceedings under the IBC (Insolvency and Bankruptcy Code) against the Appellant-Z “
IndusInd Bank in its application had sought clarification as to whether the Delhi High Court order dated December 3, 2021 had restrained the lender from initiating or maintaining IBC proceedings against Zee.
As per the December 3 order passed by a division bench, the court did not see any reason to restrain the bank from resorting to legal remedies to recover the dues. “However, since the Court has seized the matter and the trial is pending before a Single Judge Bench, we direct that no final order be passed in any proceeding initiated by the Bank without the permission of this Court. “
Due to this IndusInd Bank had to seek clarification.
Queries sent to Zee and IndusInd had not been answered till press time.
The matter pertains to the loan taken by Citi Networks. Zee was the guarantor of the loan taken by Citi Networks from IndusInd Bank in terms of the Debt Service Reserve Account Guarantee Agreement (DSRA) dated 29 August 2018. On 1 October 2020, IndusInd Bank issued a notice to Zee to enforce the DSRA guarantee agreement and to pay an amount of Rs. 83.70 crores.
Zee was aggrieved that the bank had demanded a prompt amount which was the entire loan amount given by the bank to Citi on account of shortfall in the DSRA account.
Thereafter, Zee approached the court seeking interim relief to restrain the bank from seeking recovery of any amount under the DSRA guarantee agreement in terms of the bank’s notice issued on October 1.
The media company, through its October notice, requested a stay on the implementation of the demand raised by the bank. It also asked the court to direct Citi to deposit an amount equal to one quarter’s interest in the DSRA account and direct the bank to accept the same.
However, the single bench of the Delhi High Court in its December 2020 order held that the court was not in favor of granting an ad-interim injunction to Zee.
“If the court grants the injunction sought by Zee, it would undermine the ability of the bank to resort to the remedies which are available in law for recovery of its dues,” the court said.
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,