Delhi HC seeks Zee’s reply on Aditya Birla Finance plea in ₹134-cr loan dispute

The Delhi High Court on Friday sought response from Zee Entertainment Enterprises and others on the petition by Aditya Birla Finance (ABFL) challenging an arbitral tribunal's May 12 order that dismissed its all claims against the broadcaster in a dispute related to loan repayment of Rs 134 crore.

The case related to a letter of comfort (LoC) alleged to have been issued by Zee in connection with the Rs 134-crore term loan extended by ABFL to Siti Network, an Essel Group company.

While the high court posted the Aditya Birla's petition for hearing on October 15 along with that of Zee’s petition filed earlier against the same arbitral award, it stayed a part of the tribunal's order that allowed Siti's resolution professional to withdraw Rs 23.8 crore deposited by Siti with its registry. The HC noted that Siti Networks was deleted from the array of parties before the tribunal and Zee and ABFC did not get any opportunity to meet the contention regarding this direction of permission to withdraw Rs 23.8 crore.

Zee had issued a letter of comfort to ABFC for a term loan of Rs 134 crore granted to Siti Networks. Zee Entertainment claimed it was only a corporate guarantor and not the principal debtor in Siti Network's loan. Thereafter, ABFL had invoked arbitration and moved the arbitral tribunal seeking a declaration that the letter of comfort (LoC) was a guarantee, contrary to Zee's claims that the LoC did not amount to a guarantee and that the amount it received was towards part consideration for channels and signals supplied to Siti under interconnection agreements and Trai regulations in the normal course of business.

ABFL also wanted a direction to Zee to pay the outstanding loan amount along with interest to the tune of Rs 175 crore, and/or refund Rs 108 crore paid by Siti Networks to Zee in 2020-21 (Apr-Mar).

However, the tribunal rejected all claims of ABFL and left the issue of counter-claim of Zee "open", and the parties were granted liberty to pursue their remedies before the National Company Law Appellate Tribunal.

While ABFL moved the HC against the arbitral tribunal’s decision, Zee challenged a part of the tribunal's order regarding withdrawal of Rs 23.8 crore by the Siti's resolution professional.