# In the matter of PTC India Financial Services Limited Vs. Venkateswarlu Kari And Another Civil Appeal No. 5443 of 2019

> SC judgment dated 2022-05-12. Citation: TCN-2022-SC-00046. The case involves a civil appeal regarding the legal implications of the Depositories Act, 1996,…

- **Court:** SC
- **Order date:** 12 May 2022
- **Citation:** TCN-2022-SC-00046
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/ptc-india-financial-services-limited-vs-venkateswarlu-kari-and-another-civil-app-b816f257

## Summary

### Background

The case involves a civil appeal regarding the legal implications of the Depositories Act, 1996, and related regulations on contracts of pledge under the Indian Contract Act, 1872. PTC India Financial Services Limited (PIFSL) had advanced a loan to NSL Nagapatnam Power and Infratech Limited (NNPIL), secured by a pledge of shares in NSL Energy Ventures Private Limited (NEVPL) held by Mandava Holdings Private Limited (MHPL). When NNPIL faced insolvency proceedings, a dispute arose regarding the status of PIFSL and MHPL as financial creditors, particularly concerning the pledged shares. The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) ruled in favor of MHPL, leading PIFSL to appeal to the Supreme Court.

## Facts

PIFSL advanced a loan of Rs. 125 crores to NNPIL, secured by a pledge of 31,80,678 shares (26%) of NEVPL, a subsidiary of MHPL. The pledge was created via a Pledge Deed executed on March 10, 2014. NNPIL defaulted on the loan, leading PIFSL to issue a notice to MHPL on December 28, 2017, regarding the default. On January 16, 2018, PIFSL invoked its rights under the Pledge Deed and requested the Depository Participant to accord it the status of 'beneficial owner' of the pledged shares. On January 17, 2018, NNPIL filed a petition under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016, initiating the corporate insolvency resolution process. Mr. Venkateswarlu Kari was appointed as the Interim Resolution Professional (IRP). PIFSL filed a claim as a financial

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## Issues and analysis

### Issue 1: Whether the Depositories Act, 1996, read with the Securities and Exchange Board of India …

**Ratio:** The Depositories Act, 1996, and the Securities and Exchange Board of India (Depositories

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**Reasoning:** The Supreme Court reasoned that the Depositories Act primarily aims to facilitate the

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**Interpretation:** The Court interpreted the term 'actual sale' in Section 177 of the Contract

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**Application:** In the present case, the Court applied the ratio by holding that PIFSL's action

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## Parties

- **Judges:** SANJIV K…; M.R.…
- **Appellants:** PTC India…
- **Respondents:** NNPI…; VENKATESWAR…
- **Other parties:** Over Tu…

## Timeline

- **2014-03-10 — Bridge Loan A…**: PIFSL advanced a loan of Rs. 125 crores to NSL Nagapatnam Power and Infratech Limited…
- **2014-03-10 — Pledge Deed E…**: Mandava Holdings Private Limited (MHPL) executed a Pledge Deed in favor of PIFSL,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 155 — Estate of bankrupt](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-155)

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