The National Company Law Appellate Tribunal on Friday stayed the order directing initiation of insolvency proceedings against Zee Entertainment Enterprises Ltd (ZEEL). The Appellate Tribunal also issued notice to IndusInd Bank and the case will now be heard on March 29.

The latest NCLAT move came after the Appellate Tribunal heard the plea of Zee Chief Executive Punit Goenka, who challenged the initiation of insolvency proceedings against the company by the NCLT Mumbai Bench over a loan default from IndusInd Bank.

Zee was the guarantor for IndusInd Bank’s ₹150 crore loan to Essel Group’s Siti Networks. It had failed to honour the debt service reserve account guarantee agreement (DSRA). The shortfall amounted to ₹83 crore. IndusInd Bank claims that ZEEL had undertaken obligation to meet any shortfalls in debt repayment by Siti Networks.

The NCLT had on February 22 admitted the insolvency initiation plea filed by IndusInd at a time when Zee is in advanced stages of merging with Sony in one of the biggest deals in the media and entertainment sector.

This NCLT move has raised concerns on merger delay with Culver Max Entertainment Pvt Ltd, an unit of Sony.

At today’s hearing before NCLAT, Senior Advocate Mukul Rohatgi, who appeared for Punit Goenka, said that Zee is corporate guarantor and not the principal debtor which is Siti Networks as per the agreement. According to Rohatgi, Zee had given a special guarantee not for Siti’s debt, but only to maintain a shortfall in only one tranche of interest repayment account.

Rohatgi highlighted that Zee is undergoing amalgamation with Sony and the merger will get stuck because of this even as the media firm had all the necessary approvals.

He said that demand of ₹83 crore is the principal amount loaned to Siti and Zee never issued a guarantee for the loan.