Essel Group slams dishonest debtor Kotak AMC, drags it to NCLT for neglecting contractual obligations

An Essel Group company, Konti Infrapower and Multiventures, has moved the National Company Law Tribunal (NCLT) against Kotak Asset Management Company (AMC) over the asset management company's failure to honour certain contractual obligations. Claiming dues to the tune of Rs 12.99 crore, the Essel Group entity has stated that Kotak AMC, as a corporate debtor, is yet to meet its financial obligations under an agreement dated April 6, 2019.

"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," read the plea by Konti Infrapower and Multiventures.

About the matter

The matter pertains to the Rs 20-crore non-convertible debentures (NCDs) subscribed by Kotak AMC of Essel Group entities on the pledge of listed equity shares of Zee Entertainment Enterprises Limited (ZEEL), which in turn was the underlying security for the NCDs. The NCDs 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.

According to Konti Infrapower and Multiventures' plea, certain obligations arose due to the NCD issue, for which, a sum of Rs 12.99 crore was advanced to Kotak AMC. Under the agreement, the Kotak group company was required to repay the amount to Konti Infrapower after the completion of the market regulator SEBI's routine annual inspection. SEBI was due to issue its report after completing the routine annual inspection of Kotak AMC from April 2019 to March 2020. Further, the amounts advanced were to be refunded after unit holders of Kotak AMC were paid the amounts under the underlying NCDs.

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

The next hearing in the matter is due on July 10.At the time of publishing this report, an email sent to Kotak AMC remained unanswered.