SC backs Delhi HC ruling in Zee-Aditya Birla dispute, refers case to arbitration
The dispute rose from the default of Aditya Birla Finance's Rs 150 crore loan to Essel Group's Siti Networks where Zee stood as guarantor
As the uncertainty around the Zee-Sony merger looms large, Zee has reportedly received yet another setback after the Supreme Court on Tuesday held up an order by the Delhi High Court by referring the Rs 150-crore loan dispute between Essel Group's Siti Networks and Aditya Birla Finance to arbitration.
According to reports, the court said those involved in the dispute should put their arguments in front of the arbitrator appointed by the Delhi High Court. Chief Justice of India DY Chandrachud also reportedly dropped Siti Networks from the arbitration proceedings as the company has already gone into insolvency.
The sole arbitrator appointed by the Delhi HC in March 2023 was Justice NL Rao, former SC judge.
The bone of contention is a defaulted loan worth Rs 150 crore, lent to Siti Networks under a credit arrangement letter in 2017. As per the terms, Zee stood as guarantor.
The interest rate was reportedly brought down to 13% per annum from 16% per annum as per the agreement based on the condition that the outstanding loan would be reduced to Rs 75 crore before 2018.
Aditya Birla Finance alleged that Siti failed to prepay the loan and reduce the outstanding amount as agreed upon. It also contended that Siti, Zee and Essel should be referred to the arbitration since they share a single economic identity.
Zee and Essel opposed the contention saying that they were nonsignatory to the arbritation clause in the agreement. However, the Delhi HC shot down their claims, stating that even a non-signatory or a third party can be subjected to arbitration without their prior consent in certain cases.
