Mumbai: The Bombay high court has directed Cyquator Media, a promoter company of Zee Entertainment Enterprises Ltd (ZEEL), to deposit ₹61.64 crore, after it defaulted on loan repayments to Axis Finance.
The order was delivered on 13 December, but was made public only on Tuesday.
Axis Finance is a non-banking subsidiary of private lender Axis Bank.
Axis Finance had petitioned the high court to help recover the loans given to Cyquator Media under an agreement signed in June 2018. Under the loan pact, Axis Finance had agreed to grant a term loan of ₹100 crore to Cyquator Media.
The ₹100-crore loan facility was for three years from the date of initial disbursement and carried an interest of 10.35 % per annum. Additionally, any delay or default in repayment of the loan was to entail a default interest at 2% per annum.
In September 2019, Cyquator started defaulting on the interest payments and despite repeated requests, it defaulted on multiple occasions, Axis Finance said in its petition. Mint has reviewed a copy of the petition.
Meanwhile, companies such as Direct Media Distribution Ventures, Essel Corporate, Primat Infrapower and Multiventures had pledged their shares in favour of Axis Finance to secure the loan. They are among other respondents in Axis Finance’s petition. Zee Entertainment founder Subhash Chandra, and his son and managing director of Zee Punit Goenka were also made parties to the suit.
According to the order cited above, Axis Finance filed a separate summary suit against the Goenkas for recovery of its dues, alleging that Chandra was a guarantor for the outstanding loans. Axis Finance further contended that Cyquator continued to pledge shares selectively in favour of other lenders and creditors in preference over it, while persistently defaulting on obligation 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,” the petition stated.
In this case, lawyers Karl Tamboly along with Hrushi Narvekar were instructed by managing partner Nishit Dhruva and associate partner Niyati Merchant of MDP & Partners, the law firm which represented Axis Finance.
The Economic Times reported in March 2022 that when Zee promoters sold their stock in the company to repay lenders, Axis Finance also participated and allowed the Goenka family to sell the shares pledged with it. Axis Finance recovered ₹41.36 crore of the loan amount at the time. However, the rest of the dues remained unpaid by the company, the high court order showed. Meanwhile, in December 2021, Axis had written to Zee threatening legal action against the company for non-payment of dues, but Zee had denied all allegations.
Separately, the non-bank lender moved the National Company Law Appellate Tribunal (NCLAT) on 14 September against NCLT’s 10 August order approving the Zee-Sony merger deal. The matter is, however, still pending before the appellate tribunal.
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Published: 02 Jan 2024, 10:37 PM IST