Mumbai: The Bombay high court has directed Cyquator Media, an advertising company of Zee Entertainment Enterprises Ltd (ZEEL), to file ₹61.64 crore, after it defaulted on loan repayments to Axis Finance.
The order was delivered on 13 December, but was only made public on Tuesday.
Axis Finance is a non-banking subsidiary of private lender Axis Bank.
Axis Finance has asked the high court to help recover the loans given to Cyquator Media under an agreement signed in June 2018. According to the loan pact, Axis Finance has agreed to grant a loan term 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 rate of 10.35% per annum. Moreover, any delay or default in repayment of the loan was to cause default interest at 2% per annum.
In September 2019, Cyquator started defaulting on interest payments and despite repeated requests, it defaulted several times, Axis Finance said in its petition. Mint reviewed a copy of the petition.
Meanwhile, companies such as Direct Media Distribution Ventures, Essel Corporate, Primat Infrapower and Multiventures pledged their shares in favor of Axis Finance to secure the loan. They are among other respondents in the Axis Finance petition. Zee Entertainment founder Subhash Chandra, and his son and managing director of Zee Punit Goenka were also made parties to the suit.
Pursuant 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 claimed that Cyquator continued to pledge shares selectively in favor of other lenders and creditors in preference over it, while persistently defaulting on obligations towards Axis.
“It is alleged that this demonstrates the company’s bad faith and a clear lack of intention to correct defaults on the Axis loan account,” the petition stated.
The Economic Times reported in March 2022 that when Zee promoters sold their shares 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 that time. However, the rest of the dues remained unpaid by the company, the high court order showed. Meanwhile, in December 2021, Axis wrote to Zee threatening legal action against the company for non-payment of dues, but Zee denied all the allegations.
Separately, the non-bank lender had moved the National Company Law Appellate Tribunal (NCLAT) on 14 September against the 10 August NCLT order approving the Zee-Sony merger agreement. The matter, however, is still pending before the appeals court.
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Published: 02 Jan 2024, 22:37 IST
(tagsTo Translate)Bombay HC