Bombay High Court has rejected private lender Yes Bank‘s petition to prevent Zee Entertainment from disposing off assets to a third party terming that a letter of comfort issued by the company cannot be considered a personal guarantee. A division bench of the Bombay High Court had set aside the single bench order in the case filed by the YES Bank NSE 1.27 % seeking to enforce personal guarantees against promoters of Zee Entertainment Enterprises Ltd and had directed the single bench to hear it afresh on merit.
“The plaintiff (YES Bank) has made out no case at all for the grant of interim relief; that the suit is possibly entirely misconceived and misdirected,” said Justice GS Patel in his 50-page order. “The plaint proceeds on a wholly unwarranted and erroneous interpretation of the law; that very many parties have been needlessly joined to the action; and that the IA must necessarily fail.”
Senior Counsel Dr VV Tulzapurkar along with Ativ Patel of AVP Partners appeared for the YES Bank in the case. While senior counsels Aspi Chinoy and Janak Dwarkadas appeared for Zee Entertainment and promoters of the company Punit Goenka and Subhash Chandra respectively.
Yes Bank had lent $52.5 million to a Zee subsidiary Living Entertainment Ltd (LEL) through its international finance centre branch in Gift City near Ahmedabad in May 2016. One of the Zee promoter family member Punit Goenka had provided a letter of comfort as a guarantee against the loan. Yes Bank had petitioned to enforce this guarantee and restrain the Zee promoters from selling more shares as the promoters are raising money to reduce debt.
The loans were granted when Rana Kapoor was the Chief Executive Officer of the bank. His role in the bank is now under regulatory probe.
These loans are among those being probed by the Enforcement Directorate (ED) in connection with a money laundering case against Kapoor.
Lawyers for Zee and its promoter Punit Goenka argued that the loan agreement specifies that any dispute on these loans will be bound by international law as this loan was granted through the bank’s international branch.
Source: Economic Times