In a huge relief to Kishore Biyani led Future Retails FCRPL (Future Corporate Resources Private Limited), the Bombay High Court granted injunction against IDBI Trusteeship Services Limited from selling shares pledged by FCRP amid a share market collapse due to the threat of Covid-19.
Justice KK Tated heard an interim application in a commercial suit filed by Rural Fairprice Wholesale Limited (RFWL) and FCRPL seeking urgent injunctive reliefs in relation to the threatened sale of shares pledged by in favour of IDBITSL by Debenture Trust Deed dated January 12, 2018 and April 10, 2019 in the wake of the widespread market crash following emergency measures taken by the government to tackle the Covid-19 pandemic. Other defendants in the suit are UBS AG London Branch and IDBI Bank.
Senior Advocates Vikram Nankani and Vineet Naik appeared on behalf of the plaintiffs. They were briefed by Naik Naik and Company. They submitted that as of today, the outstanding amount payable to IDBI is Rs.610 crore.
Moreover, as per the said deeds, FCRPL pledged 8% of its equity shares and on the date of the deed, market value of each share was Rs.350. However, due to the present situation due to the pandemic of coronavirus, the market has collapsed and the market value of each share is below Rs.303, Nankani argued.
Thus, plaintiffs sought injunction against the defendants in order to stop any sale of shares during this period of crisis.They also apprised the court that till date there was not a single payment default with respect to the debentures. In fact, a substantial amount had already been deposited in the escrow accounts as security for the debentures. In addition to this, plaintiffs reassured defendants of their commitments to meet their financial commitments towards them.
On the other hand, Anirudh Hariani, Varghese Thomas, Hormaz Mehta and Yohan Limathwala briefed by J Sagar and Associates appeared for the defendants.
It was argued on behalf of the defendants that as of today Rs.610 crore is to be recovered from the plaintiffs and as per present market value of shares, the total value is not more than Rs.350 crores. Therefore there is no question granting any relief.
"It is to be noted that when the debenture trust deed was executed, market value of the shares was Rs.350 per share and because of Covid-19, share market has collapsed and per share value comes below Rs.100
Considering the present situation of the market and Covid-19, I am of the opinion that plaintiffs are required ad-interim protection till next date."
Next date of hearing is May 4, 2020.
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