More Stories

Informist, Friday, Feb. 28, 2025

NEW DELHI – The Delhi High Court has directed IFCI Ltd. to return in six weeks the shares pledged by Bhushan Infrastructure Pvt. Ltd. and Tremendous Mining and Minerals Pvt. Ltd. which the financial institution had kept with itself despite the loan amount being paid by the two companies. Bhushan Infrastructure and Tremendous Mining had pledged 1.5 million equity shares and 4.85 million equity shares respectively, which were issued by Bhushan Steel Ltd., and now converted into shares of Tata Steel Ltd.

In 2018, Tata Steel acquired Bhushan Steel following corporate insolvency resolution process of the latter.

Once the loan is repaid by the borrower in full as per the loan agreement, as a necessary corollary, all such pledged shares are required to be released from the pledge and have to be returned back to the pledger, said the high court. IFCI, being a public body and discharging public functions, cannot be heard complaining that since there was delay on the part of the petitioners approaching them, they will not return them at all, said the court. Rather, there was no requirement of even making a demand by the petitioners and the return was natural, implicit and inherent consequence, once the loan was duly repaid and the entire liability with respect to the loan agreement had been cleared, the court added.

"This court, therefore, would not mince any word in commenting that the duty was, squarely, upon the shoulder of IFCI Ltd. to return these shares forthwith, once it received the entire payment," said Justice Manoj Jain. For reasons best known to IFCI, despite the loan being repaid way back in 2015, it did not take any step whatsoever towards returning the pledged shares.

To make things worse, when a notice was sent to IFCI seeking return of such pledged shares, the financial institution, instead of denying such return on the ground of delay, responded by saying that such request was under examination, said the court. IFCI, itself, kept the matter alive, said the court, adding that it meant even the company was of the view that such shares had to be returned. "They (IFCI), for inexplicable reasons, did not return such shares and took no decision, either. As a matter of fact, till date, no decision has been taken by IFCI Ltd. about said request," the court added.

Justice Jain said that it would be travesty of justice if the parties are rather asked to go to a civil court for adjudication of a dispute which does not even seem to exist. Undoubtedly, the petitioners should have also been quick and swift in seeking refund of these shares, said the court. The petitioners cleared their liability way back in 2015 and, simultaneously, with the clearance of their liability, they should have requested IFCI to return all such shares, the court added. "But in the given facts and circumstances, since the primary duty was cast upon IFCI Ltd., it cannot be said that the petitioner should be non-suited on the ground of delay and laches," said the court.

On the other hand, it seems to be a case of continuous wrong and cause of action continues to subsist as despite the fact that the loan was repaid way back in 2015, it was IFCI which was still holding on to the pledged shares, said the court. Such action is nothing but an attempt to unjustly enrich itself, the court added.

Giving the facts of the case of Bhushan Infrastructure, the court noted that there was an agreement for pledge of shares between the company and IFCI in 2014. As per the agreement, Bhushan Infrastructure had approached and requested IFCI to sanction a corporate loan to the extent of INR 250 million. As per the terms and conditions of the pledge agreement, Bhushan Infrastructure created a security by way of pledge of 1.5 million equity shares which it held and which were issued by Bhushan Steel. The loan amount along with interest was duly paid in the year 2015. In the case of Tremendous Mining, the loan liability was INR 1 billion and the shares pledged were 4.85 million in 2013. On failure of IFCI to return pledged shares, Bhushan Infrastructure and Tremendous Mining moved the high court. 

On the National Stock Exchange, shares of IFCI closed 3.5% lower at INR 41.09 on Friday.  End

Reported by Surya Tripathi

Edited by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.