Axis Bank subsidiary threatens action against Zee promoters for non-payment of dues

This latest resolution by Axis Finance comes after the hunt for regulatory bodies to seal their approval on the proposed merger by Zee and Sony.

In a 7-page letter dated December 30, Axis Finance has threatened legal action against Subhash Chandra and Puneet Goenka, including opposing the merger of Zee and Sony Pictures Networks India.

“Please note that if payment is not made to our customers by you or your group of companies within a period of seven days from the date of receipt of payment, our customers will have no choice but to initiate appropriate legal proceedings against you, including a protest.” No other option will be left. The legal notice sent by MDP Partners on behalf of Axis Finance states that the merger between ZEEL and Sony. Regulatory authorities have not been created, our clients are SEBI, National Stock Exchange, Bombay Stock Exchange and will be compelled to report the same to the Reserve Bank of India.” The letters were marked to Chandra and Goenka.

Mint has reviewed a copy of Axis Finance’s letter to Zee.

Axis Bank is at the center of the issue 200 crore loan to Chandra’s privately owned firms- Sciquator Media Services Pvt Ltd and Primate Infra Power and Multiventures Pvt Ltd. These loans were backed by securities of Direct Media Distribution Ventures Pvt Ltd, Essel Corporate LLP and Primate Infrapower & Multiventure Pvt Ltd. In the ensuing years, Chandra’s family could not pay the loan, forcing Axis Finance to enforce the pledged shares and recover a part of the amount. As per the letter, Chandra owes Axis Finance dues 146 crores.

In response to the letter on Monday, Zee dismissed all the allegations made by Axis Finance as baseless and unwarranted.

“Initially, Zee has no contract or legal secrecy with Axis Finance Ltd. Zee has not made any request to AFL for any credit facility for Scuitator Media Services Pvt Ltd. Zee neither has any loan document. for which it has not provided. Any assurance to AFL for repayment. For this reason, not a single allegation raised in your notice has been addressed or a case has been made out against Zee,” the media company said. he said.

The media company also defended Goenka’s involvement in the case, saying, “With respect to Mr. Goenka, he has no contract or legal secrecy with the AFL, as alleged or not at all. He spoke in favor of the AFL. Has not signed any loan document or created any security. It is wrong to allege that Mr. Goenka, in his capacity as the promoter or MD/CEO of Zee, gave any assurance to AFL that the said loan would be repaid.

In its letter, Axis Finance claimed that Chandra has given assurances that the loan given to the sycamore and the primate will be repaid by him, which has been rejected by Zee in its response.

In September last year, Zee was forced to merge with Japan’s Sony after Invesco, the American money manager, sought to remove Goenka and restructure the board.

The latest threat from Axis Finance is unlikely to pose any major hurdle in the way of the Zee-Sony merger. However, this could prove to be an embarrassment for the promoter group which wants to close the deal with Sony at the earliest.

As of March 2021, Axis Finance had assets of management value 10,092 crore and total debt 9633 crores. NBFCs reported net profit 194 crore by March 2021 as compared to 163 crore in the previous year.