NCLAT Upholds NCLT Ruling, Dismissing IDBI Bank's Insolvency Plea Against Zee Entertainment

The National Company Law Appellate Tribunal (NCLAT) has dismissed IDBI Bank's appeal to initiate insolvency proceedings against Zee Entertainment (ZEEL). The decision upholds an earlier ruling that relied on Section 10A of the Insolvency & Bankruptcy Code (IBC), which barred such applications for defaults during the specified period.

The National Company Law Appellate Tribunal (NCLAT) dismissed IDBI Bank's plea to initiate insolvency proceedings against Zee Entertainment on Monday. The two-member bench upheld a previous decision by the Mumbai bench of the National Company Law Tribunal (NCLT), which rejected the bank's request.

The appellate tribunal did, however, allow IDBI Bank the option to file a new petition for defaults occurring outside the timeframe specified in Section 10A of the Insolvency & Bankruptcy Code (IBC). This section, introduced post-lockdown, prevents any application for a corporate insolvency resolution process against a debtor for defaults from March 25, 2020, for one year.

According to IDBI Bank, ZEEL is the guarantor for a loan of Rs 150 crore taken by Siti Networks, the primary borrower. The loan required maintaining a Debt Service Reserve Account, which was not complied with, leading to a claimed default of Rs 149.60 crore.

(With inputs from agencies.)