Bombay High Court Asks Reliance Power, Edelweiss To Try Resolving Share Sale Issue Amicably
The Bombay High Court suggested Reliance Power Ltd. and Edelweiss Group to resolve their dispute over sale of pledged shares amicably while posting the matter for hearing after two weeks.
A division bench of Chief Justice NH Patil and Justice NM Jamdar was hearing a petition by Reliance Power’s promoter company Reliance Project Ventures and Management Pvt. Ltd. The promoter entity has challenged a single judge bench’s order that refused to stop sale of pledged shares by Edelweiss Group or grant any relief to Reliance Power.
The division bench suggested that the parties concerned to try resolving the dispute out of court and said it would hear the petition after two weeks.
“Such matters can be resolved amicably...outside of court...consider it,” Chief Justice Patil said.
On Feb. 13, a single bench presided by Justice KR Shriram said it found no merits in Reliance Power’s arguments prima facie and the entire pleadings made by Reliance Power “smacked of deceit.”
Reliance Power argued before Justice Shriram’s bench that the sale of its pledged shares by Edelweiss’ ECL Finance Ltd. was illegal and must be stopped. It urged the court to stop such sale as an interim relief and to subsequently declare the sale illegal and void.
It also requested the court to direct Edelweiss to pay it a compensation of over Rs 2,700 crore for the fiscal and reputation loss caused by such sale.
As per the plea, Reliance Power and its sister company Reliance Communications pledged some shares to various promoter companies of the Edelweiss Group in lieu of some money it borrowed.
On Feb. 4, Reliance Power received a notice from Edelweiss’ ECL Finance notifying the sale of its shares by the debenture holding companies of the Edelweiss group.
The next day, shares worth Rs 5.96 crore were sold. Some shares were also transferred to the debenture holders the same evening on the now lowered value.
ECL, through its lawyer Janak Dwarkadas, told the single bench on Feb. 13 that it was well within its rights to sell the shares.
According to ECL, in August this year, Reliance Power’s share value plummeted and as per their contract, Reliance Power was required to pay an additional 2 percent interest on the amount it borrowed.
However, the power company refused to pay the additional amount.
“On Feb. 1 this year, RCom announced bankruptcy. The share value began to drop. But Reliance Power never bothered to communicate with us. We needed to protect our debenture holders and therefore, began the sale of shares pledged to us,” Dwarkadas then said.