HC's Division Bench upholds order restraining sale of assets by Williamson

The Division Bench of the Delhi High Court has upheld an injunction order restraining Williamson Magor group companies from selling or transferring assets.

Eveready Industries India, the battery maker in the Williamson Magor group, said in a stock exchange filing on Thursday that Delhi High Court had in reference to a matter filed against some of the promoters of the company with regard to alleged dues passed an ad-interim ex-parte order of injunction by which the company had been restrained from selling, transferring, alienating, disposing, assigning, dealing, encumbering or creating third party rights on any of its assets and carrying out any change in its capital structure, or any corporate or debt restructuring.

The injunction order was passed by a single judge in a case filed by KKR India Financial Services which had extended Rs 100 crore each to Williamson Magor & Company and Williamson Financial Services and has been upheld by the Division Bench. The order was passed on February 8.

While the borrowers are the holding companies Williamson Magor & Company and Williamson Financial Services –the restraining order impacts Eveready, McNally Bharat Engineering and McLeod Russel India. The companies had filed appeals against the injunction order before the Division Bench which have been dismissed with costs at Rs 2 lakh each.

The Bench said that the reason why the assets of the appellants are liable to be preserved is because it was the underlying financial strength on the basis of which the loan was extended by the lenders/ respondents. The borrowers have no assets of their own, so it becomes imperative to protect these assets for the aid of the Arbitral tribunal.

The appellants had argued that they have no legally binding obligation or liability towards repayment of the facility, as they are not a party to the facility agreement, nor beneficiaries of the amounts borrowed under the agreement.

Eveready said in its exchange filing that the company is in the process of taking appropriate action as required, based on advice from its legal counsel.

The company continues to be advised that since it is neither a party to any agreement or arrangement with the petitioner, in respect of the said alleged dues nor does any claim pertaining to the said dues arise from the company, the said injunction order against the company, should not be legally tenable, it said.