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The Bombay High Court has dismissed a petition by YES Bank against Zee Entertainment and its promoters on the grounds that there is no merit.
“I find that the interim application is utterly without merit. It should be dismissed,” Justice GS Patel said in the 50-page order.
The private sector lender had approached the Bombay High Court for an order to prevent the promoters of Zee Entertainment from selling shares pledged against which it had taken loans. YES Bank wanted to take these shares and had invoked guarantees on pledged shares.
The bank had wanted to enforce a Letter of Comfort given by Zee Entertainment as a guarantee.
The case pertains to 2016 when YES Bank had lent $52.5 million to Living Entertainment Ltd (LELM), which is a wholly- owned Mauritius-based subsidiary of Zee Entertainment. The loans were given through YES Bank’sinternational finance centre branch in Gift City. To fund the share acquisition in Veria (and to refinance certain intercorporate deposits used for the Veria buy-in), finance was sought from YES Bank in March 2016 for a loan to LELM.
Senior Advocate VV Tulzapurkar, along with Ativ Patel, argued the case on behalf of YES Bank, while Senior Advocates Aspi Chinoy and JD Dwarkadas appeared on behalf of Zee Entertainment and its promoters Punit Goenka and Subhash Chandra.
YES Bank, through its lawyer, had argued that the LoC is unconditional, irrevocable and absolute guarantee, and that by issuing it Zee had guaranteed the repayment of the entire loan that Zee gave LELM.
Zee’s counsel had contended that the LoC contains no ‘guarantee’ by Zee to repay LELM’s debt to YES Bank.
YES Bank had filed a suit on June 26 to declare that the LoC is valid, subsisting and binding on Zee Entertainment and it should pay it $51.6 million.
The verdict is being seen as a reprieve for Zee Entertainment.
Zee Entertainment’s scrip closed 13.28 per cent higher on BSE on Wednesday, while YES Bank’s shares ended the day at a gain of 4.99 per cent.
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