MC EXCLUSIVE Essel Group entity moves NCLT against Kotak AMC, say sources

Essel Group entity moves NCLT against Kotak AMC, say sources

An Essel Group entity has dragged Kotak Asset Management Company (AMC) to NCLT, claiming dues of Rs 12.99 crore. The matter was filed in May and came up for hearing before the NCLT Mumbai bench. The Essel Group entity Konti Infrapower and Multiventures has filed the petition in the matter. As per Konti Infrapower plea, certain obligations were arising due to NCD issue and for this purpose Rs 12.99 crore was advanced to Kotak AMC. AMC was to repay the amount after completion of SEBI’s routine annual inspection of the AMC.

Konti Infrapower, in its plea, said, “As the Corporate Debtor failed and neglected to honour its contractual obligations as given under Agreement dated 6th April 2019, the Applicant vide demand notice dated 19 February 2025, inter-alia called once again upon the Corporate Debtor to release the due amounts as a pro-tem measure. Till date, the Financial Creditor has not received payment from the Corporate Debtor."

As per the petition copy, under the agreement, the amount advanced to Kotak AMC was refundable to Konti Infrapower after the completion of first inspection of the AMC by SEBI. SEBI inspection was for covering the period of April 2019 to March 2020 and upon SEBI issuing a report. Further, the amounts advanced were to be refunded after unit holders of Kotak AMC were paid the amounts under the underlying NCDs.

Konti Infrapower said, it wrote two letters to the Kotak AMC on 6 July 2022 for the release of the amounts as per the agreement, to which Kotak AMC replied on 28th July 2022 that the inspection of SEBI is not complete. Konti Infrapower claimed that SEBI inspection of Kotak AMC, which is the trigger point for refund of its money, has been completed and a report dated 28 March, 2023 has been prepared. And also, the Kotak AMC liquidated its NCDs and repaid the unitholders.

The matter is related to the Rs 20-crore NCDs subscribed by the Kotak AMC, of Essel Group entities on the pledge of listed equity shares of Zee Entertainment Enterprises Limited, which in turn was the underlying security for the NCDs.

The NCDs of Rs 20 crores were sold by Kotak AMC to certain other investors in February 2019 and the advancement of Rs 12.99 crore was in relation to this part only.

An Essel Group spokesperson said, “Konti Infrapower had raised monies in form of NCDs from Kotak Mutual Fund. Entire payment had been made under the NCDs to Kotak Mutual Fund in the month of September 2019”.

The spokesperson further added, “As a separate transaction, Konti Infrapower had advanced certain monies to Kotak AMC Ltd. in April 2019, which were to be repaid by Kotak AMC to Konti Infrapower upon completion of certain milestones. The said monies are due and payable, and Kotak AMC has defaulted on payment of its obligations. As a result, Konti Infrapower has filed petition for initiation of corporate insolvency resolution process (CIRP) against Kotak AMC." Matter is sub-judice before NCLT, Mumbai.

Email seeking reply of Kotak AMC did not elicit any response till the time of publishing the story.

Kotak AMC was represented by senior advocate, Gaurav Joshi, who opposed the petition. Joshi claimed that petition is not maintainable. Joshi was of the view that it was not a debt but a securities deposit. He argued that the company had defaulted and given it a security deposit towards the liabilities of the unit holders. He further said that it’s a settled law that no petition lies against the financial service provider as the definition of corporate person excludes the financial service provider.

The matter will be heard next on July 10.