Bombay HC rejects Zee promoters' appeal in loan default dispute

Delhi: According to media reports, on Wednesday, the Bombay High Court dismissed a review petition from the promoters of Zee Entertainment Enterprises (ZEEL) related to a loan default case. The petition sought to overturn a December 2023 ruling.

The case involved Cyquator Media, Essel Corporate LLP, and Direct Media Distribution Ventures, entities associated with Zee, which Justice Abhay Ahuja ruled against. They argued that the previous court order resulted in "grave prejudice."

Originally, Axis Finance, a non-banking subsidiary of Axis Bank, brought the suit against Cyquator Media to recover a term loan of ₹100 crore extended in June 2018. This loan was structured with a repayment period of three years and an interest rate of 10.35% per annum, with an additional penalty of 2% per annum for any delays or defaults in payment.

By September 2019, Cyquator began defaulting on interest payments and, despite several reminders from Axis Finance, continued to miss payments. 

Axis Finance also highlighted that Cyquator persistently pledged shares to other lenders and creditors while neglecting its financial obligations towards them, signaling a lack of intention to rectify the defaults.

The reports suggested that in response to these defaults, the Bombay High Court initially directed Cyquator Media to deposit ₹61.64 crore after they defaulted on the loan repayments. The Zee promoters contested this in their review petition, claiming that Axis Finance initiated the lawsuit unfairly to pressure them into paying money they did not owe, and argued that the suit was not maintainable.

Representatives for Axis Finance were counsels Karl Tamboly, Hrushi Narvekar, and Niyati Merchant from MDP and Partners, while ANB Legal represented the Zee promoters.