Home / Companies / News /  IndusInd Bank may recover Siti dues: HC

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 insolvency court. This clears the decks for the private lender to initiate insolvency proceedings against the media company to recover dues it says are owed by Siti Networks, an Essel Group entity.

A bench led Justice Jyoti Singh said, “It is clarified that this court never prohibited respondent-bank from initiating or maintaining proceedings under the IBC (insolvency and bankruptcy code) against the appellant-Zee".

IndusInd Bank in its application had sought a clarification on whether a Delhi high court order passed on 3 December 2021 barred the lender from initiating or maintaining IBC proceedings against Zee.

According to the 3 December order passed by a division bench, the court did not see any reason to restrain the bank from taking recourse of the legal remedies to recover the dues. “However, since the court is seized of the matter and the suit is pending before a single judge bench, we direct that no final order be passed in any proceeding so initiated by the bank, without leave of this court," it had said.

This led to IndusInd bank to seek a clarification.

Queries sent to Zee and IndusInd were not answered till press time.

The matter pertains to a loan taken by Siti Networks. Zee was the guarantor to the loan availed by Siti Networks from IndusInd bank in terms of the Debt Service Reserve Account Guarantee Agreement (DSRA) of 29 August 2018. On 1 October 2020, IndusInd bank issued a notice to Zee invoking the DSRA Guarantee Agreement and asked it to pay the amount of 83.70 crore.

Zee was aggrieved that the Bank had made a demand for an accelerated amount which was the entire loan amount advanced by the Bank to Siti on account of the shortfall in the DSRA Account.

Subsequently, Zee approached the court seeking interim relief that the bank be restrained from seeking recovery of any amount under the DSRA Guarantee Agreement in terms of the bank’s notice issued on 1 October.

The media company pleaded for a stay on the implementation of the demand raised by the bank through its October notice. It also asked the court to direct Siti to replenish the DSRA account with amount equivalent to one quarter’s interest and direct the bank to accept the same.

A single bench of Delhi High Court, however, in its December 2020 order held that the court was not persuaded in favour of granting an ad-interim injunction to Zee.

“If the court were to grant an injunction as sought by Zee, it would debilitate the bank’s ability to take recourse to remedies which are available to it in law for recovery of its dues," the court held.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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