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A Divison bench of the Delhi High Court has stayed the Single Judge order directing for maintenance of status quo with respect to the repayment to be made by Indiabulls Housing Finance to its Non-Convertible Debenture holders.
The stay order was passed by a Bench of Justices Siddharth Mridul and Talwant Singh in appeals preferred by Association of Mutual Funds of India, Securities and Exchange Board of India (SEBI) and IDBI Trusteeship against the order passed by the single Judge Bench earlier this month.
After hearing the parties at length through video conferencing, the Court issued notice in the appeals and ordered,
One of the Appellants, the Association of Mutual Funds of India, which is the representative trade body of Asset Management Companies, contended that the order passed by the Single Judge Bench essentially granted an open-ended moratorium in favour of Indiabulls, by drawing a parallel between the moratorium policy in case of term loans issued by the Reserve Bank of India (RBI) and the purported need for similar safeguard for debentures which are regulated by SEBI.
The Association pleaded that before directing for maintenance of status quo, the Single Judge Bench afforded no opportunity to the Association or its members to clarify the far reaching catastrophic ramifications of the ad-interim protection afforded to Indiabulls.
In response to the appeals, Indiabulls contended before the Court that in spite of the rendering of the Single Judge Bench's order, it had continued to discharge its financial obligations qua all the non-convertible debenture holders.
The matter would be heard next on May 4.
SEBI was represented by Solicitor General Tushar Mehta, Senior Advocate Neeraj Malhotra and Advocate Ashish Aggarwal.
Association of Mutual Funds of India was represented by Senior Advocate Neeraj Kishan Kaul with Advocate Somasekhar Sunderesan, briefed by Trilegal lawyer Shankh Sengupta, along with Tine Abraham, Vatsala Kumar, Sahiba, Ramchandra Madan and Deepak Joshi.
Trilegal’s Shankh Sengupta said, "The appeal is expected to be heard finally soon. This is not only a relief for the Mutual Funds industry, but ultimately for the public at large who hold units in these Mutual Funds. Today’s order of the High Court comes as a relief in times such as this, when a fairly large part of the middle class would be looking to their savings."
IDBI Trusteeship was represented by Advocate Abhishek Baid.
Indiabulls was represented by Senior Advocate Rajiv Nayar with Advocates Karan Luthra, Rishi Agrawala, Kartik Nayar.
Read the Orders: