Additional information provided by the company subsequently has been incorporated at the end of the report
The Pavan Sachdeva-promoted MS Shoes will take the Delhi Stock Exchange (DSE) to court this week for failing to appoint an arbitrator to settle the issue of non-compliance by underwriters to honour their commitment after the company's Rs 350-crore public issue failed in February 1995.
The company had received guarantees from 256 underwriters, covering the entire public offer. While the commercial banks had committed to subscribe about Rs 100 crore of the public issue, some of the finance companies had promised to pick up the remaining portion.
The lawyers of MS Shoes, Dutt & Menon, said they have already sent six reminders to the Delhi bourse for the appointment of an arbitrator.
But the DSE president, Parminder Singh, said the bourse has taken legal opinion on the matter. He said DSE is awaiting for the opinion since the issue is an unprecedented one. According to the Sebi guidelines, the regional stock exchange (where the company is based) is required to appoint an arbitrator to settle the issue.
MS Shoes wants the underwriters to urgently comply with their commitments, which will enable it to repay about Rs 330 crore debt to commercial banks, Hudco and other creditors. The company has returned to the investors the 40 per cent subscription its public offer had received.
In May 2014, MS Shoes informed us of the subsequent developments in the company which are as follows:
The Delhi high court appointed the arbitrator vide order dated March 14, 2007 and the awards were decided in favour of the company and against the underwriters by the arbitrator in June 2012 totalling to more than Rs 98 crore out of Rs 50 crore that were decreed in favour of the company.