SC refuses to interfere with Bombay HC order restraining FIs from selling pledged shares of FCRPL

The Supreme Court Friday refused to interfere with an interim order of the Bombay High Court restraining IDBI Trusteeship Services Ltd and UBS Bank from selling shares pledged by Kishore Biyani- led Future Corporate Resources Pvt Ltd (FCRPL) amid a share market collapse due to the COVID-19 pandemic.

In a hearing conducted through video conferencing, a bench comprising Justices Sanjay Kishan Kaul and B R Gavai refused to entertain the appeal of the UBS Bank against the March 30 order of the Bombay High Court.

We have heard counsel for the parties. The matter is listed before the High Court on May 4. We are of the view that the interim nature of the order is not likely to be interfered with under Article 136 of the Constitution. The Special Leave Petition is dismissed, the apex court said in its order.

While senior advocate K V Viswanathan appeared for UBS Bank, senior lawyer Mukul Rohatgi represented FCRPL.

The high court, which has now listed the matter for further hearing on May 4, had passed the interim order restraining the financial institutions from selling shares pledged with them by the FCRPL.

It had heard the application of FCRPL and others seeking urgent relief in relation to the threatened sale of shares pledged by IDBI Trusteeship Services Ltd by a Debenture Trust Deed, dated January 12, 2018 and April 10, 2019, in wake of the widespread market crash following emergency measures taken by the government to tackle the coronavirus or COVID-19 pandemic.

As per the plaintiff (FCRPL), the outstanding amount payable to IDBI is Rs 610 crore.

As per the Debenture Trust Deed, the plaintiffs pledged 8 per cent of their equity shares with the defendant. The plaintiffs argued that if shares are sold in this situation, irreparable loss would be caused to them.

It is to be noted that when the Debenture Trust Deed was executed, the market value of the shares were Rs 350 per share. Because of COVID-19, share market has collapsed and the per share value has come to below Rs 100, the high court had said in its order.

Considering the present situation of the market and COVID-19, I am of the opinion that the plaintiffs require interim protection till next date, it had said.