The National Company Law Tribunal (NCLT) has admitted Siti Broadband Services, a subsidiary of Essel Group-owned cable TV and broadband company Siti Networks, into the corporate insolvency resolution process following a plea by lender Aditya Birla Finance.
The NCLT has appointed Harvinder Singh as an interim resolution professional (IRP) for the company. Aditya Birla Finance moved NCLT following a default in payment of ₹4.38 crore by Siti Broadband.
In 2020, Siti Broadband had availed of a loan of ₹5 crore from Aditya Birla Finance, to be repaid in 19 quarterly instalments after a moratorium of five quarters from the first disbursement. According to Aditya Birla Finance, Siti Broadband has been defaulting on payments since November 2021.
In its order dated October 31, the NCLT stated that Siti Broadband promoters, management and personnel are under legal obligation to extend every assistance and cooperation to the IRP in managing the day-to-day affairs of the company.
“In case there is any violation committed by the ex-management or any tainted or illegal transaction by ex-directors or anyone else, the IRP would be at liberty to make an appropriate application to this tribunal with a prayer for passing appropriate orders,” the NCLT order reads.
In its reply, Siti Broadband submitted that Aditya Birla Finance issued a loan recall notice on May 24, 2022, seven days before an instalment payment. It said the loan recall notice was issued on default by Siti Networks with respect to other loans.
As per the recall notice, Aditya Birla Finance proceeded to recall the entire loan facility advanced to Siti Broadband and called upon the company to pay a sum of ₹4.43 crore since there was a default by Siti Networks.
Siti Broadband stated that such a recall was bad in law as there was no default by the company till that date. “The same is evident from the fact that the corporate debtor was servicing the loan, which was completely payable until 2026, and the account of the corporate debtor was not declared a non-performing asset,” it added.
Earlier, the NCLT initiated an insolvency process against Siti Broadband’s parent company, Siti Networks, and Zee Entertainment Enterprises Limited following a plea by IndusInd Bank.
However, the National Company Law Appellate Tribunal (NCLAT) stayed the corporate dispute redressal body’s insolvency order against Siti. The NCLAT had also disposed of IndusInd’s insolvency plea against Zee after the two parties arrived at a settlement.
