Bombay High Court dismisses Zee promoters’ petition against loan default order

The Bombay High Court on Wednesday dismissed a review petition filed by the promoters of Zee Entertainment Enterprises Ltd challenging a December 2023 order in a loan default case. A detailed order on the matter is awaited.

Justice Abhay Ahuja was hearing a petition filed by Zee promoters Cyquator Media, Essel Corporate Llp and Direct Media Distribution Ventures, which claimed the order would cause them “grave prejudice.”

In December, the Bombay High Court directed Cyquator Media to deposit ₹61.64 crore after it defaulted on repayments to Axis Finance, the non-banking subsidiary of Axis Bank. The review petition said Axis Finance had filed the suit to pressure them into paying money they didn't owe it, adding that the suit was not maintainable.

Also read: Bombay HC asks Zee promoter to deposit ₹61.6 crore over default to Axis Finance

In its suit in the high court, Axis Finance said it was looking to recover a term loan of ₹100 crore it gave Cyquator Media through agreements signed in June 2018. The loan was for three years and carried an interest of 10.35 % a year. Any delay or default in payments would attract additional interest of 2% a year.

In September 2019, Cyquator started to default on interest payments and, despite repeated requests, defaulted on multiple occasions, Axis Finance said. It also claimed Cyquator continued to pledge shares in favour of other lenders and creditors while persistently defaulting on its obligations towards Axis. “It is submitted that this demonstrates the company’s mala fides and clear lack of intention to rectify defaults towards the loan account of the Axis,” Axis Finance said.

Counsels Karl Tamboly, Hrushi Narvekar and Niyati Merchant of MDP and Partners represented Axis Finance, while ANB Legal appeared for the Zee promoters.

Restructuring

Last week, Mint reported that Zee Entertainment Enterprises’ board of directors has endorsed a new organizational framework proposed by managing director and chief executive officer (CEO) Punit Goenka.

Goenka, who will assume direct charge of the domestic broadcast business, had proposed to leverage synergies among the core business segments which include broadcast, digital, movies and music.

The new structure, effective immediately, will see Siju Prabhakaran, who led the south cluster of channels, take additional responsibility for the west cluster, and report to Goenka.

Also read: Zee sees another exit

Samrat Ghosh, who led the east cluster of channels, will take additional responsibility for north and premium clusters, while Ruchir Tiwari will continue to lead the Hindi movies cluster.

Vishnu Shankar will continue to lead &TV and the free-to-air segment, and Ashish Sehgal will be responsible for integrated advertisement sales for the broadcast and digital business, to maximize value for the advertisers with a sharp focus on profitability. All of them will report to Goenka.

Also read: Zee-Sony deal: Zee withdraws merger implementation application from NCLT