Mumbai: The Bombay high court has not given any respite to the companies of the Anil Ambani-led Reliance Group, which had sought compensation, alleging misconduct in sale of their pledged shares by Edelweiss group companies.

The high court not only refused to grant interim relief, but also described the group’s stand as deceitful and misleading. The court is yet to give its final judgment and has deemed its views as “prima facie”.

On the Anil Ambani group companies’ argument that they had not been given adequate notice before the pledged shares were sold, the court observed: “It is rather strange that such an argument is made by plaintiffs. When the contract was entered into, plaintiffs found one business day notice to be reasonable… Therefore, stand of plaintiffs’ smacks of deceit. Plaintiffs attempt is to mislead. At no point after the occurrence of events of default, did plaintiffs … ask for increasing the notice period.”

The court further said, “Plaintiffs don't pay default interest, don't top up the security ratio, don't even tell defendants how they are going to make good, don't even reply to letters from plaintiffs and now take a mendacious stand that notice period in the contract was not reasonable.”

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The court also said there was no case of “fiduciary obligations” being breached by Edelweiss group companies in selling pledged shares.

The court asked the Reliance group companies’ counsel Aspi Chinoy, “…what is the breach of contract or which are the provisions of the agreements that plaintiffs are alleging defendants committed to breach.”

“I find nothing wrong in what defendants did,” Justice K.R. Shriram, who presided over the proceedings, said.

Denying any interim relief to Reliance group companies, Justice K.R. Shriram said, “… defendants cannot be stopped from exercising their rights under the contract and applicable law.”

The court observed that as plaintiffs have not yet proved that the damages suffered by them, “this cannot be a reason for stopping defendants from taking further action on the pledged shares.”

On February 8, the Anil Ambani group companies had said, “illegal, motivated and wholly unjustified action” by Edelweiss group and L&T Finance precipitated a fall of Rs 13,000 crore, an unprecedented 55 per cent, in market capitalisation of the group companies in a short span of four days, causing substantial losses to its shareholders.

The Anil Ambani group companies subsequently filed a petition against Edelweiss companies in the Bombay high court.

On the allegation that selling of pledged shares was an attempt to bring down the stock price of the companies and purchase shares at a lower price, the Edelweiss group companies’ counsels said that they would submit the detail of every sale price and how the amount realised has been applied.

By arrangement with Business Standard.

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