Bombay High Court restricts ICICI Home Finance from selling pledged MEP Infra Shares

Must Read

SC: Under-21 Convicts Can Be Given Less Than Minimum Sentence, Resorts To Probation of Offenders Act

The Supreme Court resorted to the Probation of Offenders Act to sidestep the mandate under Section 397 of the Indian Penal Code that mentions a sentence of not less than 7 years to those convicted of armed robbery, to give a chance to two young convicts to reform their lives.

Environment Protection Act Passed at the Instance of Foreign Powers: NHAI in Karnataka HC

The National Highways Authority of India (NHAI) claimed in a submission that the Environment Protection Act 1986 was passed not only for the protection of the environment by the parliament but also at the instance of foreign powers. This statement was made while referring to a UN conference and got the NHAI into great trouble in the Karnataka High Court.

Delhi High Court To Implement a Hybrid System Through Virtual and Physical Hearing

On Friday the Delhi High Court said that they have initiated steps to implement a mode wherein hearing can be done by virtual as well as physical mode. The Delhi High Court is aiming to implement the Hybrid mode. It stated that when the particular bench is conducting a virtual hearing the lawyer may opt for this mode after giving prior intimation about the same.

Mercy Plea of Rajiv Gandhi Assassination Case To Be Decided in Four Weeks, TN Governor To Supreme Court

Tamil Nadu Governor Banwarilal Purohit on Thursday told the Supreme Court that a decision on the mercy petition of one of the convicts serving a life sentence for the assassination of former Prime Minister Rajiv Gandhi, AG Perarivalan will be taken within four weeks. The petition has been pending with the Governor since December 30, 2015.

Bombay High Court Questions FIR Over Journalist Alleged of Communist Comment on WhatsApp

An FIR lodged against the editor of Marathi newspaper, Rajkumar Chhajed has been questioned by the Bombay High Court. The Maharashtra Police has accused Chhajed of creating a rift between the two communities based on a WhatsApp message.

Allahabad High Court Expresses Dissatisfaction on Counsels Seeking Unnecessary Adjournments

The petition had been filed by Smt. Radha prayed to issue directions to Judicial Magistrate-I in Faizabad. The petition...

Follow us

The commercial suit, along with an interim application has been filed in the High Court of Bombay by the plaintiffs against the defendants for a declaration that invocation of the pledge in favour of defendant no.1 in respect of the shares of one MEP Infrastructure Developers Limited, is invalid.

Courts in India are granting relief to companies hit hard by the COVID-19 outbreak. The Delhi High Court recently restrained Yes Bank from declaring Anant Raj Ltd. as an NPA on similar grounds. The following is the case of Ideal Toll & Infrastructure Pvt. Ltd., Mumbai and Anr. V/s. ICICI Home Finance Co. Ltd., Mumbai & Anr.

Brief Facts of the Case

Defendant No.1 (ICICI Home Finance) has sanctioned a line of credit by way of term loan for a sum of Rs. 5 crores for a period of 12 months with an option to renew the same on the terms set out in the Sanction Order. Plaintiff No. 1 has pledged 14 lakhs shares of MEP Infrastructure Development Limited (‘suit shares’) and this constitute the security for the suit term loan. Defendant No. 2 is a depository participant, with whom the suit shares lie. Defendant No.1 claims that the plaintiffs were liable to pay a sum of Rs. 4.72 crores to defendant No.1 as of 20th January 2020 and the defendant had notified the plaintiffs of the same and in the process, the sale of shares had commenced.

Plaintiff’s Arguments

Mr. Nankani, canvassing the plaintiffs put forward that:

Because of the lockdown in the country, BSE Sensex had fallen by 9878.71 points from 1st March 2020 and as a result, the price of the suit shares had also dropped. In light of the same, the only source of income of the plaintiff company was also terribly affected. The defendants had ignored this.

RBI had issued a Press Release as a result of the financial condition caused by Covid-19, which provides for all commercial banks and lending institution to permit to a moratorium of three months on payment of instalments. Despite that, the defendants proceeded to sell the shares and had not extended time for payment.

According to RBI’s ‘Statement on Developmental and Regulatory Policies’ and ‘Covid-19-Regulatory Package’, that the benefit of the moratorium must be extended to the plaintiffs in view of the guidelines and instructions and hence, the plaintiff company should not be declared as NPA.

Defendant’s Arguments

Mr. Shetty, canvassing for the defendant put forth that:

As per the suit filed by Ideal Toll & Infrastructure Pvt. Ltd and one of its Directors, and as per the shares pledged to Defendant no.1, a sum of Rs.1.71 crores is due from the plaintiffs. As per the companion suit filed by a different individual and director and as per the shares pledged, a sum of Rs. 3.01 crores is due from the plaintiffs. Both these dues are as on 12th January 2020.

The moratorium would be made applicable for loan repayments only from 1st March 2020 and hence the amount payable by the plaintiff was overdue in January 2020 itself.

If the plaintiff company fails to regularise the payment of the dues with Rs.1.71 crores by 13th April, it would be declared NPA.

Court’s Decision

The RBI’s ‘Statement on Developmental and Regulatory Policies’ and ‘Covid-19-Regulatory Package’ would apply in respect of payment of instalments of terms loans outstanding “as of 1st March 2020”.

The plaintiffs were liable to pay Rs.1.71 crores as of 12th January 2020. There is no doubt that defendant no.1 has a vested right to sell the pledged shares. The sale of shares at this moment would appear to be prompted by anxiety to recover the amount of Rs.1.71 crores that is overdue from the plaintiffs.

Paragraph 2 of the RBI Circular No.RBI/2019-20/186 (DOR No.BP.BC.47/21.04.048/2019-20) dated 27th March 2020 reads that,

“2. In respect of all terms loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), cooperative banks, all-India Financial Institutions and NBFCs (including housing finance companies) (“lending institutions”) are permitted to grant a moratorium of three months on payment of all instalments 1 falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.”

It is therefore clear that the grant of the moratorium of three months would apply to the payment of all instalments falling due between 1st March 2020 and 31st Mach 2020. Hence the amount admittedly due as of January 2020 would not be covered by the moratorium. The moratorium would, however, cover the amounts claimed by defendant no.1 in the companion suit filed by the individual Director.

In the view that the condition of the plaintiff company is seriously depleted, the plaintiff shall pay a sum of Rs.71 lakhs, along with accrued interest on overdue amount as of 12th January 2020 to defendant no.1 on or before 15th May 2020.

In the meantime, the defendant company shall not sell the shares and the plaintiff company cannot be declared as an NPA.


Libertatem.in is now on Telegram. Follow us for regular legal updates and judgements from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe for our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

SC: Under-21 Convicts Can Be Given Less Than Minimum Sentence, Resorts To Probation of Offenders Act

The Supreme Court resorted to the Probation of Offenders Act to sidestep the mandate under Section 397 of the Indian Penal Code that mentions a sentence of not less than 7 years to those convicted of armed robbery, to give a chance to two young convicts to reform their lives.

Environment Protection Act Passed at the Instance of Foreign Powers: NHAI in Karnataka HC

The National Highways Authority of India (NHAI) claimed in a submission that the Environment Protection Act 1986 was passed not only for the protection of the environment by the parliament but also at the instance of foreign powers. This statement was made while referring to a UN conference and got the NHAI into great trouble in the Karnataka High Court.

Delhi High Court To Implement a Hybrid System Through Virtual and Physical Hearing

On Friday the Delhi High Court said that they have initiated steps to implement a mode wherein hearing can be done by virtual as well as physical mode. The Delhi High Court is aiming to implement the Hybrid mode. It stated that when the particular bench is conducting a virtual hearing the lawyer may opt for this mode after giving prior intimation about the same.

Mercy Plea of Rajiv Gandhi Assassination Case To Be Decided in Four Weeks, TN Governor To Supreme Court

Tamil Nadu Governor Banwarilal Purohit on Thursday told the Supreme Court that a decision on the mercy petition of one of the convicts serving a life sentence for the assassination of former Prime Minister Rajiv Gandhi, AG Perarivalan will be taken within four weeks. The petition has been pending with the Governor since December 30, 2015.

Bombay High Court Questions FIR Over Journalist Alleged of Communist Comment on WhatsApp

An FIR lodged against the editor of Marathi newspaper, Rajkumar Chhajed has been questioned by the Bombay High Court. The Maharashtra Police has accused Chhajed of creating a rift between the two communities based on a WhatsApp message.

Allahabad High Court Expresses Dissatisfaction on Counsels Seeking Unnecessary Adjournments

The petition had been filed by Smt. Radha prayed to issue directions to Judicial Magistrate-I in Faizabad. The petition sought a speedy decision in...

[Delhi Riots] When the IT Ministry Calls Us, We Will Go Says Harish Salve To Delhi High Court

The Vice President and Managing Director of Facebook, Ajit Mohan told the Supreme Court that when the representatives of the company are called by the Information Technology Ministry they will come and record their statements.

Allahabad High Court Seeks Response on Compensation of Cutting Trees From National Highways Authority of India (Nhai) 

The Order had come in the form of a Public Interest Litigation (PIL) filed by a bunch of law students in Uttar Pradesh. The...

Doctrine of Proportionality Must Adhere to Reasonableness Principal Test: Madras High Court

Young Men's Christian Association built a commercial complex and leased it without having due permission. The District Collector & Tahsildar issued a show-cause notice...

Delhi High Court Refuses To Stay Release of ‘The White Tiger’ on the OTT Platform Netflix

A plea requesting a stay on the release of the film ‘The White Tiger’ by the American producer, John Hart Jr. alleging copyright violation was rejected by the Delhi High Court on Thursday.

More Articles Like This

- Advertisement -