14 February 2019: The Anil Ambani-led Reliance Power (RPower) on Wednesday moved the Bombay high court, seeking to reverse the sale of its pledged shares by the Edelweiss Group. But the court refused to grant any interim relief to the embattled company.
A single-judge bench headed by KR Shriram refused to order the reversal of the sale process or grant any other relief to the company and posted the matter for detailed hearing on Thursday.
The move follows a war of words between the two companies last week when Edelweiss and L&T Finance had sold pledged shares of R-Power and other group companies, following a steep correction in share prices.
The stock plunge was the result of Reliance Communications (RCom) filing for bankruptcy on February 1. Since then, Reliance Group companies have lost around 70% of their market value.
The judge said he will hear the petition in detail on merit over other prayers made by R-Power, such as declaring the earlier sale illegal and void and seeking compensation from Edelweiss for the financial and reputational losses following the liquidation of its shares.
In its plea, R-Power said it – along with group company RCom – had pledged some shares of various promoter companies to the Edelweiss Group in lieu of a loan it had taken.
On February 4, R-Power received a notice from Edelweiss ECL Finance for the sale of its shares by the debenture-holding companies of Edelweiss Group. And the next day, shares worth Rs 5.96 crore were sold. Some shares were also transferred to the debenture holders the same evening by the debenture trustee at a much lower value.
ECL counsel Janak Dwarkadas said it was well within its rights to sell the pledged shares. Dwarkadas also said in August 2018 that R-Power shares had plummeted and, according to their contract, the company was required to pay an additional 2% interest on the loan. But it refused to pay the additional amount so far.
R-Power counsel Aspi Chinoy, however, argued that according to its contract, a share sale can have been initiated only by the trustee of the debenture holders and not the debenture holders themselves.