Bom HC | IDBI restrained from selling shares pledged by Fairprice Ltd. (Future Group) amid market collapse due to COVID-19

Bombay High Court: K.K. Tated, J., granted ad interim relief to Rural Fairprice Wholesale Ltd. from selling the pledged equity shares as the share market has collapsed due to COVID-19 and would have resulted in huge loss to the plaintiffs.

In the present matter, applicant’s sought injunction against respondent’s notice dated 17-03-2020 and sale deed notice dated 18-03-2020 with regard to shares pledged by them with defendant 1 by Debenture Trust Deed.

Senior Counsel for the plaintiffs submitted that outstanding loan payable to defendant 2 of about Rupees 610 crores.

It has been stated that, as per the debenture trust deed as stated above 8% of equity shares was pledged. On the date of debenture trust deed, market value of share was Rs 350 per share.

Due to COVID-19, the market value per share quoted in share market had gone down to below Rs 303.

Relying on clause 6 of the said trust deed, the defendants are secured.

Further it has been stated that if shares are sold in the present situation, it would cause an irreparable loss to the plaintiffs. Therefore Court be pleased to restrain defendant 2 from selling these shares in the market.

Counsel for the defendant vehemently opposed the grant of ad interim relief.

Decision of the Court

Bench noted that as the market has collapsed due to COVID-19, per share value has come below Rs 100.

Thus looking at the present situation, ad interim relief till next date is to be granted to the plaintiffs.

Matter to be listed on 04-05-2020. [Rural Fairprice Wholesale Ltd. v. IDBI Trusteeship Services Ltd., Commercial Suit (L( 307 of 2020, decided on 30-03-2020]

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