The Delhi High Court has allowed Franklin Templeton Mutual Fund (MF) to recover dues worth ₹616 crore from Essel Group by selling the shares of Zee Entertainment Enterprises (ZEE) and Dish TV, as per an Economic Times report.

The shares that Franklin Templeton are allowed to sell are given to the firm as a security cover for debentures of Essel Infraprojectes worth ₹425 crore.

Templeton decided to invoke the pledge on shares when it did not receive any money from the Essel Group’s debentures, which got matured on May 22 this year. Templeton had invested in the debentures in May 2015.

Essel Group moved the Delhi HC as it sought to get a stay order due to poor market conditions.

However, IDBI Trusteeship Services — which is the debenture trustee — countered that the problem dates back to pre-Covid times, and as the trustee has powers to invoke the pledge if the contractual obligations are not met.

“When absolute discretion lies in law and under the subject contracts with the pawnee (IDBI Trustee) to sell the shares when it likes and as it likes, surely, this court cannot substitute that discretion with its own discretion,” said the Delhi High Court in its judgment.

“The company (Essel Group) is definitely exploring legal options and could move the Supreme Court in the matter,” said a legal expert, who is privy to the development, to ET.

IDBI Trusteeship Services submitted to the court that any injunction in the matter would be detrimental to the interests of the unitholders of Franklin MF.

According to a copy of the petition, accessed by ET, IDBI Trusteeship Company held 6.25 crore shares of Dish TV and 43 lakh shares of ZEE.

“Debentures constitute a component of the net asset value of a mutual fund… The reduction of the NAV will directly impact the subscribers of these mutual funds, which includes public funds,” said IDBI Trusteeship Services in its petition.

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