NCLAT stays insolvency against Zee Entertainment on Punit Goenka plea

The National Company Law Appellate Tribunal (NCLAT) on Friday stayed initiation of insolvency proceedings against Zee Entertainment (Zee) in some relief to the company. The move came after NCLAT heard the plea of Punit Goenka, MD and CEO of Zee, challenging insolvency proceedings against the company.

In a statement on Friday, Goenka said that he respected the decision taken by the NCLAT. “We remain committed towards protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger with Culver Max Entertainment,” he said.

Goenka had moved the NCLAT on Thursday a day after the Mumbai bench of the National Company Law Tribunal (NCLT) had admitted insolvency proceedings against Zee on a plea filed by IndusInd Bank, a financial creditor of Zee.

Senior Advocate Mukul Rohatgi, appearing for Goenka at the NCLAT hearing on Friday, argued that the recovery of the loan, where Zee was a guarantor, must go through the Debt Recovery Tribunal, not through the Insolvency Code.

Rohtagi also said that Zee had given a special guarantee not for Siti Network’s debt, but only to maintain a shortfall for one tranche of interest repayment.

Rohtagi also said that no arguments from Zee were heard by the NCLT when admitting insolvency proceedings against the company, which was a violation of the principle of natural justice.

Zee is in advanced stages of merging with Sony in one of the biggest deals in the media and entertainment sector.

The NCLT matter pertained to a default of Rs 89 crore by Zee Group’s multisystem operator arm Siti Networks, according to IndusInd Bank, for which Zee was a guarantor.

IndusInd Bank has also filed a separate insolvency petition against Siti Networks at the NCLT, where it has appointed Mohit Mehra as the resolution professional.