An interim plea filed by the Reliance Power Ltd, an Anil Ambani Reliance Group (ADAG) company, against the sale of pledged shares by Edelweiss Group was rejected by the Bombay High Court today. The ADAG is also claiming damage of Rs. 2,700 crore from the Edelweiss Group alleging maliciously dumping the shares of three group companies which has resulted in a plunge in its prices. In the plea ADAG was seeking to declare the sale 'null and void' in the interim.
The single judge bench of the Bombay High Court has given three weeks’ time to Edelweiss to file its response. A detailed copy of the high court's order is awaited.
The bench denied interim relief on the ground that the contract between Reliance Power and Edelweiss required the non-banking finance company (NBFC) to give a 24 hour notice before the sale of pledged shares and the same was given to Reliance Power in this case.Last week, Edelweiss Group, IDBI Trusteeship Services Ltd, STCI Finance Ltd and L&T Finance Ltd had invoked the pledge on shares in Reliance Communications Ltd, Reliance Capital Ltd, Reliance Power Ltd and Reliance Infrastructure Ltd.
The lenders subsequently sold the invoked shares in the open market. The Reliance Group had alleged that the exercise of rights to enforce the security is 'illegal and excessive and against the process and requirement of the respective borrowings' documentation.
Vikram Trivedi, the managing partner of law firm Manilal Kher Ambalal & Co, is representing Edelweiss Group in the case along with Senior Counsels Janak Dwarkadas and Ravi Kadam. While, Rashmikant & Partners, a law firm along with Senior Counsels Aspi Chinoy and Darius Khambata are representing ADA Group in the dispute.
Dwarkadas during the arguments said that Edelweiss was within its rights to sell the shares. As per the contract between Reliance Power and Edelweiss group any fall in share price would require a payment of additional 2% interest on the loan. 'There was a fall in the share price of the company in August 2018 but the additional 2% interest is yet to be given', he said.
This comes even as Reliance Power, an ADAG group company filed a complaint with Securities and Exchange Board of India (Sebi) against Edelweiss to declare the NCFC as 'not fit and proper'.
The company in the complaint alleged that Edelweiss sale of the pledged shares were 'illegal and motivated' which led to a steep fall in the shares value. Reliance Power lost 62.24% between 4 February to 7 February, the period when these pledged shares were sold.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.