Indiabulls Housing Finance Gets Relief From Delhi High Court On NCD Payments
The Delhi High Court has granted protection to Indiabulls Housing Finance Ltd. from any coercive action if it fails to make payments to its debenture holders.
The order—which will remain in effect till May 19, the next date of hearing—comes in light of the Covid-19 pandemic that has led to a national lockdown that has stalled all businesses barring essential services.
The interim order was passed in a petition filed by the housing financier, which argued that it has become has become “impossible” to recover debts owed to it by various institutions on the back of the lockdown and the Reserve Bank of India’s circular dated March 27—which allows all lending institutions to grant a three-month moratorium on payments of all instalments during March-May.
Senior Advocate Rajiv Nayyar, while appearing for Indiabulls Housing Finance, sought an interim order that would restrain any coercive action against them for failing to pay its debenture holders.
However, Senior Advocate Neeraj Malhotra appearing for the Securities and Exchange Board of India, opposed the plea saying that the circular doesn’t apply to the facts of the case. “It doesn’t affect liability arising from non-convertible debentures,” he said.
Malhotra said those who are owed payments by Indiabulls Housing Finance must also be made party to the case and asked for impleading them in the proceedings.
Indiabulls Housing Finance didn’t object to the impleadement request but said the court must grant them the interim protection until the next date of the hearing. Nayyar said the company is willing to pay “interest on the principal amounts, to the said parties, as an ad interim arrangement, in accordance with the respective agreements, but without creating any equity against his client on that ground”.
A bench headed by Justice C Hari Shankar said it’s inclined to pass the order given the lockdown and the peculiar facts of the case.