Delhi High Court reverses invocation of GTL Infrastructure's shares

The Delhi High Court has reversed the invocation of GTL Infrastructure's shares by IFCI, a move that makes the financial organisation a pledgee of the tower firm's shares and not an owner.
In its ruling on 29 August 2011, the High Court also said GTL Limited is entitled to take appropriate action under law to recover its losses.

On 12 July 2010, Chennai Network Infrastructure Ltd (CNIL), a subsidiary of GTL Infrastructure Ltd, availed a loan of Rs250 crore from IFCI.
This amount was to be repaid at the end of 36 months from the date of disbursement.

GTL Ltd, a promoter company of GTL Infrastructure, had offered GTL Infrastructure shares as collateral security to IFCI that were to be kept in the non disposal escrow account.

CNIL had offered other securities, apart from hypothecation of movable properties, mortgage of immovable properties and corporate guarantees among others.

On 17 June 2011 and 20 June 2011, GTL Infrastructure shares fell by around 70 per cent, leading to an erosion of the collateral value.
IFCI had converted these pledges into equity shares and sold five lakh shares in the market, a move GTL retaliated by taking the lender to court.

''The acts of the defendant (IFCI) by appropriation of 17.6 crore shares to himself without notice are not correct, and all other consequential acts in relation to the said shares were inconsequential as no such right of foreclosure subsists under the law and the defendant.''

Earlier, ICICI Bank, the country's largest private sector lender, has taken a 29.3-per cent stake in debt-laden telecom network services provider GTL Ltd by taking over shares pledged by its promoter, according to a stock exchange filing.

Earlier, ICICI had recovered about Rs194 crore, when GTL's stock ended at Rs68.2 on the BSE.
GTL owes about Rs500 crore to the bank.