Lawstreet Journal

Bombay High court: Zee Learn to make good on the default of moratorium not paid to UTI Asset Management Company

Lawstreet Journal 20 Jul 2020 9:43pm

Image courtesy: Lawstreet Journal Judiciary Bombay High court: Zee Learn to make good on the default of moratorium not paid to UTI Asset Management Company

In a recent judgment in the case of Zee Learn Vs. UTI Asset Management, the Bombay HC has held that the RBI’s moratorium scheme cannot be applied to mutual funds and debentures.

The petitioner Zee Learn had defaulted on payment of Rs 44 cr to UTI Assets Management under a debenture deed, which was to be redeemed on 8th July 2020. In the writ petition filed before the Bombay High Court, Zee Learn claimed that the default occurred due to the COVID-19 pandemic. It has also asked for an extension of the redemption date to three months after the government allowed schools to fully open.

 

The counsel for Zee Learn has argued that though Reserve Bank of India’ March 27 and May 23 moratorium was not referred to mutual funds or debentures the principle behind it should be extended to the petitioner.

UTI Asset Management Company opposed the claim and stated that Zee Learn has defaulted in repayment in early July 2019 as well before the spread of COVID-19. UTI also said that RBI’s directions do not apply to debentures and mutual funds. It also stated that 21,000 small investors need to be paid by Zee Learn for the debentures held. Therefore, any relief would affect those small investors.

The two-judge bench comprising of Justices RD Dhanuka and VG Bisht ruled in favor of UTI Asset Management Company and directed Zee Learn to pay the default.

The order read as follows:

“The entire petition is based on the reliance placed on the moratoriums dated 27th March… Continue Reading...


Tagged: Bombay High Court  
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