Hi Venkatesh,
I am newbie to textmate. How do I find out whether it is bound to some
action?
Hit control-command-t : in the resulting dialog click on the triangle near the magnifying glass and select "key equivalent". Then enter the command you're trying to find the binding for (in this case command-z). It should show you the command in the bundle that is currently intercepting your attempt to undo changes.
To eliminate this key binding open the bundle editor (control-option-command-b) and navigate to the offending item. Just remove the entry in the activation section.
Good luck, Paul