LI Network
Published on: 10 September 2023 at 11:30 IST
The Bombay High Court has recently rejected an interim application filed by World Crest Advisors LLP, which had sought a restraining order against Yes Bank.
The order aimed to prevent Yes Bank from transferring, alienating, or creating third-party rights regarding shares that World Crest claimed to own in DishTV.
Justice RI Chagla, a single judge, declined to restrain Catalyst Trusteeship from participating in DishTV’s management and affairs based on rights asserted by World Crest over the shares.
World Crest had approached the High Court through a lawsuit, seeking a declaration that it was the rightful owner of 440 million shares of DishTV.
Yes Bank, another shareholder of DishTV, asserted that these shares had been pledged in favor of Catalyst Trusteeship, a security trustee. This pledge was made by five different companies, including World Crest, to secure term loans provided by Yes Bank.
World Crest informed the court that Yes Bank had assigned assets worth ₹48,000, which included the DishTV shares, to JC Flower Assets Reconstruction.
Senior Advocate Navroz Seervai, representing World Crest, argued that the transfer of shares had led to Yes Bank and JC Flower asserting ownership rights rather than merely serving as pledgees. He contended that this situation amounted to fraud and rendered the pledge void from the beginning.
On the other side, Senior Advocate Darius Khambata, representing Yes Bank and JC Flower, argued that JC Flower was indeed the beneficial owner of the shares in question.
According to the pledge deeds and power of attorneys executed between World Crest and Yes Bank, Yes Bank was authorized to exercise voting rights over these shares.
Justice Chagla, after considering the arguments, prima facie concluded that the transfers were permitted by the pledge deeds, which authorized Yes Bank to carry out such transfers.
The court also noted that including the exercise of voting rights in the pledge deeds did not violate the law, constitute a conversion, or amount to a mortgage of movable property. Consequently, the court rejected World Crest’s request for a temporary restraining order.