Mumbai: In a regulatory update submitted to BSE and NSE, Zee Entertainment Enterprises Ltd. confirmed that the Arbitral Tribunal has ruled in its favour in the arbitration proceedings filed by Aditya Birla Finance Limited (ABFL). The case revolved around a Rs 134 crore term loan that ABFL had extended to Siti Networks Limited. ABFL alleged that Zee had issued a Letter of Comfort (LOC) that effectively functioned as a guarantee for the loan.
In its claim, ABFL sought Rs 174.57 crore from Zee, which included the principal amount and interest. Alternatively, ABFL demanded a refund of Rs 108 crore that Siti had paid Zee during FY 2020–21.
Zee rejected all of ABFL’s allegations, clarifying that the LOC did not equate to a financial guarantee. The company explained that the Rs 108 crore payment was made by Siti in the ordinary course of business under interconnection agreements for signals and channels, in accordance with TRAI regulations.
Zee also filed a counterclaim of Rs 15 crore, asserting that this amount—held as a fixed deposit by Siti for Zee—was wrongfully appropriated by ABFL.
On May 12, 2024, the Arbitral Tribunal issued its final award, rejecting all of ABFL’s claims against Zee. It upheld Zee’s position that the LOC was not a guarantee and that the Rs 108 crore was a legitimate business transaction. However, the Tribunal did not make a final ruling on Zee’s Rs 15 crore counterclaim. Instead, it granted liberty to both parties to take the issue to the National Company Law Appellate Tribunal (NCLAT) for further adjudication.
Importantly, there is no involvement of Zee’s key management, promoters, or persons in control in this dispute. There has been no settlement, and the award does not have any adverse financial impact on the company.
