Delhi HC issues notice to Zee in Aditya Birla Finance’s plea against arbitral award

New Delhi: The Delhi High Court has issued a notice to Zee Entertainment Enterprises (ZEEL) in response to a petition filed by Aditya Birla Finance (ABFL) challenging an arbitral tribunal’s decision dated May 12, 2025. 

The tribunal had dismissed ABFL’s claims against ZEEL in a dispute concerning a Rs 134 crore term loan extended to Siti Networks, an Essel Group company. The court has also sought ZEEL’s response to the plea, scheduling the next hearing for October 15, 2025.

The dispute centres around a Letter of Comfort (LoC) allegedly issued by ZEEL in connection with the Rs 134 crore loan provided by ABFL to Siti Networks in 2017. ABFL claimed that the LoC constituted a financial guarantee, holding ZEEL liable for repayment of the loan, including interest, totalling Rs 174.57 crore.

Alternatively, ABFL sought a refund of Rs 108 crore paid by Siti Networks to ZEEL during the 2020–21 financial year. 

ZEEL, however, contested these claims, asserting that the LoC was not a guarantee and that the payments received from Siti Networks were part of regular business transactions under interconnection agreements and TRAI regulations.

In its May 12 ruling, the arbitral tribunal, presided over by former Supreme Court judge Justice L. Nageswara Rao, rejected all of ABFL’s claims, affirming ZEEL’s position that the LoC did not amount to a financial guarantee. 

The tribunal also left ZEEL’s Rs 15 crore counterclaim unresolved, granting both parties the liberty to pursue further remedies before the National Company Law Appellate Tribunal (NCLAT). Additionally, the tribunal noted that ABFL was entitled to a refund of stamp duty paid on the LoC under the Maharashtra Stamp Act.

The Delhi High Court, while addressing ABFL’s petition, also stayed a portion of the tribunal’s order that permitted Siti Networks’ resolution professional to withdraw Rs 23.8 crore deposited with the tribunal’s registry. The court observed that Siti Networks had been removed from the arbitration proceedings due to its insolvency, and neither ZEEL nor ABFL had the opportunity to contest this withdrawal.

ZEEL clarified in a regulatory filing that the dispute does not involve its key management personnel, promoters, or ultimate controlling entities. The company also stated that no settlement has been reached, and thus, there are no financial implications or penalties to report at this stage.