IFCI Cannot Withhold Pledged Shares Once Loaned Amount is Cleared by Borrower: Delhi HC [Read Order]
IFCI asserted that they had withheld the pledged shares in terms of another loan availed by one of the Petitioner’s group concerns.
![IFCI Cannot Withhold Pledged Shares Once Loaned Amount is Cleared by Borrower: Delhi HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Delhi-High-Court-1.jpg "IFCI Cannot Withhold Pledged Shares Once Loaned Amount is Cleared by Borrower: Delhi HC [Read Order]")
The Delhi High Court recently ruled that IFCI Limited (previously Industrial Finance Corporation of India) has no authority to withhold shares pledged by a borrower while availing a loan, once the borrower has fully repaid the loan. Two connected Writ Petitions were lodged by Bhushan Infrastructure Private Limited and Tremendous Mining and Minerals Private Limited & Anr. praying for...
The Delhi High Court recently ruled that IFCI Limited (previously Industrial Finance Corporation of India) has no authority to withhold shares pledged by a borrower while availing a loan, once the borrower has fully repaid the loan.
Two connected Writ Petitions were lodged by Bhushan Infrastructure Private Limited and Tremendous Mining and Minerals Private Limited & Anr. praying for the release of 15,06,932 equity shares of Bhushan Steel Limited that were pledged by the Petitioner as collateral for a ₹25 crore loan. The Court further directed that shares pledged by Tremendous Mining and Minerals Pvt Ltd for a separate ₹100 crore loan be similarly returned, as both companies had repaid their respective debts in full by 2015.
Akhil Sibal, Ranjana Roy Gawai, Vashudha Sen, Vineet Wadhwa and Jhanvi Sindhu appearing for the Petitioners sustained that there is no dispute that the subject-loan liability ceases to exist any more following its repayment in 2015. The Petitioner had issued multiple legal notices to IFCI due to their withholding of the shares but to no avail.
Affective Ways Of Tax Planning for HUF, Partnership Firm and Will, click here
Meanwhile, Niraj Kumar and Nikhil Narayan Arora, appearing for IFCI contended that such a writ petition, lodged after 7 years from the date of repayment was not maintainable, and the Petitioner should have sought remedies by means of a civil suit instead.
It was further contended that another group concern of the Petitioner, M/s Bhushan Steel Limited, had an outstanding loan liability of ₹Rs.400 crores which had been defaulted, and that IFCI had withheld the prior shares and sought to adjust the same against the liabilities of Bhushan Steel Limited to protect public money involved.
Justice Manoj Jain, presiding over the Bench observed that a borrower’s obligation ends once the loan is fully repaid. The Court held that Bhushan Steel’s separate liability did not entitle IFCI to withhold shares pledged under a different loan agreement.
It was further noted that IFCI had already received ₹281 crore from Tata Steel under Bhushan Steel’s insolvency resolution plan, undermining its justification for retaining the shares.
Read More: Govt Amends Customs Rules: Importers Must Provide “Proof of Origin” Instead of Certificate
Holding that IFCI’s actions amounted to unjust enrichment, the Delhi High Court directed IFCI to release to the petitioners all the pledged shares which had now been converted to Tata Steel shares within a period of six weeks.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
