L&T Finance ready to put Rs 10 lakh in PM Fund to avoid contempt charges
Accepting the apology, the Delhi High Court observed last week “even if there is no willful disobedience, yet recklessness or negligence can also amount to contempt of court”.
The development took place on a petition filed by DM South India Hospitality. According to the company, it had taken out a ₹185 crore loan from L&T Finance in March 2017, of which ₹100 crore was repayable over 15 years.
To secure the loan, the company and other backers provided collateral worth more than ₹600 crore, including shares of blue chip listed companies.
The company alleged that although there was no outstanding principal or interest, L&T Finance sold the pledged shares in April 2019, citing a drop in the value of the securities below the required value. actions.
DM South initiated arbitration proceedings against L&T Finance on the grounds that the sale of the pledged shares by L&T Finance was illegal.
The company said the arbitrator issued a decision in November 2021 and ruled that L&T Finance had no right to sell the shares under the loan agreements. The arbitrator also awarded litigation costs to DM South amounting to ₹5.77 crore to be paid by L&T Finance.
DM South has contacted Delhi HC stating that they are ready to pay the entire remaining outstanding loan amount of ₹31.48 crore, but L&T Finance should release all securities worth more than ₹600 crore.
As a result, in December 2021, DM South delivered a sight draft of ₹25.72 crore to L&T Finance’s solicitor and the High Court then ordered L&T Finance to release all securities within 72 hours, at the exception of 10 crore of listed shares. The High Court further ordered DM South to pay the balance of ₹5.77 crore within a week, which the company claims to have complied with.
However, since L&T Finance would not have fully released the securities until January, the company again went to high court to bring a contempt action against L&T Finance. Finding the prima facie strength of the plea, the High Court issued a notice of contempt for cause to L&T Finance.