Siti Networks Insolvency: NCLAT Blocks NCLT Order; Axis Bank, Lenders Told to Hold Rs 143 Crore

The National Company Law Appellate Tribunal has ordered Axis Bank and other lenders in Siti Networks' insolvency case to hold Rs. 143 crore in a separate interest-bearing account to protect the company’s interests during the appeals process.

Siti Networks, part of the Essel Group, has been undergoing insolvency proceedings since early 2023, following a petition by IndusInd Bank over an alleged default of Rs 148 crore. Although the NCLT initially admitted the case, an interim order from the NCLAT halted the proceedings in March 2023 after one of Siti’s directors, Shilpi Asthana, contested the order.

In this case at hand, allegations were made by Asset Reconstruction Company (India) Ltd., a creditor in the case, that Axis Bank and other lenders unlawfully withdrew funds from Siti Networks during this stay.

The Mumbai bench of the National Company Law Tribunal then ordered these transactions to be reversed, mandating that all appropriations made during the moratorium period be returned to Siti Networks within four weeks.

Rohit Ramesh Mehra, appointed as Siti Networks’ resolution professional in August 2023, also alleged that Axis Bank had distributed around Rs143 crore to various other lenders, including IndusInd Bank, RBL Bank, Aditya Birla Finance, and IDBI Bank, even while the insolvency stay was in effect. This prompted the Asset Reconstruction Company to bring the matter before the NCLT.

However, the financial institutions made an appeal against this directive of the NCLT order before the NCLAT. The appellate tribunal therefore directed that these funds be held in a separate account pending the outcome of the appeals process.

The appeal will now be heard next on Dec 3 at 2 p.m.

Axis Bank was represented by Senior Advocates Abhinav Vasisth and Arun Kathpalia and Advocate Manmeet Singh before the NCLAT.