The appellate bench of the National Company Law Appellate Tribunal (NCLAT) has tossed out IDBI Bank’s attempt to revive a failed insolvency case against Zee Entertainment Enterprises Ltd (ZEEL), reaffirming an earlier decision by the National Company Law Tribunal (NCLT) that the bank’s claim didn’t make the legal cut.
At the heart of this dispute lies a dated guarantee—signed in August 2012—where ZEEL agreed to back certain debt service obligations of Siti Networks Ltd. The trouble started when Siti slipped into non-performing territory in December 2019, but IDBI only got around to invoking ZEEL’s guarantee in March 2021, long after the window for pandemic-related default protections under Section 10A of the Insolvency and Bankruptcy Code had kicked in.
Section 10A, a legal shield brought in during the chaos of COVID-19, bars creditors from launching insolvency actions for defaults arising between March 25, 2020, and March 25, 2021. IDBI’s demand landed smack in the middle of that no-go zone.
The NCLT wasn’t swayed by the ₹149.60 crore figure IDBI threw on the table. Instead, it zeroed in on the specifics: ZEEL’s guarantee, it held, only covered interest payments on the original ₹50 crore facility—not any top-ups or escalated obligations. Also, the guarantee’s purpose—maintaining a reserve account—was rendered moot when the entire credit facility was called back in February 2021, extinguishing any lingering duties ZEEL might’ve had.
The bank had argued that the clock on default should start ticking from when Siti was declared an NPA. But the tribunal drew a line: a guarantor doesn’t step into liability until they’re formally called upon. In this case, that didn’t happen until March 5, 2021—comfortably within the Section 10A protected period.
The NCLAT bench, led by retired Justice Ashok Bhushan and Technical Member Barun Mitra, upheld the logic and legality of the NCLT’s stand. However, it left the door slightly ajar for IDBI, stating the bank is free to file a new insolvency application—as long as it’s for a default that falls outside the COVID shield timeline.
In short: ZEEL dodged the insolvency bullet, for now. But round two could be waiting in the wings—if IDBI recalibrates its case for a post-moratorium default.
