Axis Vs Zee: NCLT Admits Zee Group Company Primat Infrapower & Multiventures Into Insolvency, Details

The Mumbai bench of the National Company Law Tribunal (NCLT) admitted Axis Finance's plea to initiate the corporate insolvency resolution process against Primat Infrapower and Multiventures Pvt. Ltd., a ZEE group company. This move marks a crucial step in addressing the Rs 100 crore default by Primat Infrapower.

Axis Finance, a financial creditor to Primat Infrapower, filed a Section 7 application under the Insolvency and Bankruptcy Code (IBC), 2016, seeking insolvency proceedings against the company for defaulting on a loan of Rs 100 crore. The loan, sanctioned in June 2018, had a tenure of three years from the date of disbursement. However, Primat Infrapower failed to meet its repayment obligations, prompting Axis Finance to approach the NCLT.

"We hold that the debt and default have been satisfactorily established from the records. We are also satisfied that a default of well over Rs 1 crore has been committed by the corporate debtor (Primat), thereby satisfying the minimum threshold prescribed u/s 4 of the code," stated the bench led by Justice Kuldeep Kumar Kareer.

The tribunal's decision to admit the plea led to the appointment of Devarajan Raman as the interim resolution professional (IRP). Raman will oversee the day-to-day affairs of Primat Infrapower, ensuring compliance with the insolvency process and protecting the interests of the creditors.

Counsels Nausher Kohli and Niyati Merchant, representing MDP & Partners, advocated for Axis Finance, while advocate Harsh Behanya, along with Prachi Sanghvi, appeared for Primat Infrapower. The detailed arguments and evidence presented by both sides were meticulously reviewed by the NCLT bench, leading to the conclusion that Primat Infrapower had indeed defaulted on its obligations.

This case is not the first instance where Axis Finance has sought legal recourse to recover dues from ZEE group companies. In December 2023, the Bombay High Court allowed Axis Finance to recover dues worth over Rs 60 crore from Cyquator Media, another entity under the ZEE umbrella. Cyquator had been defaulting on interest payments since September 2019, prompting Axis Finance to take legal action.

Moreover, in April, the Bombay High Court dismissed a review petition filed by the promoters of Zee Entertainment Enterprises Ltd, challenging the December 2023 order.

The admission of the insolvency plea against Primat Infrapower adds to the financial woes of the ZEE group, which has been grappling with multiple legal and financial challenges. The decision sends a clear message to corporate debtors about the seriousness of financial obligations and the potential repercussions of defaults.

As the insolvency process unfolds, all eyes will be on the resolution professional and the committee of creditors. Their task will be to evaluate the financial health of Primat Infrapower, explore potential restructuring options, and possibly identify suitable investors or buyers for the company's assets. The goal will be to maximize value recovery for the creditors while ensuring the company's operational viability.