BharatPe Approaches Delhi High Court Challenging Transfer of Unity Bank Warrants by Centrum and JBCG

BharatPe’s parent company, Resilient Innovations Private Limited, has approached the Delhi High Court against Centrum Financial Services Limited and JBCG Advisory Services Private Limited, alleging the unauthorised transfer and creation of encumbrances over warrants issued by Unity Small Finance Bank.

The petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996, in the matter titled Resilient Innovations Vs JBCG.

Resilient Innovations has sought interim reliefs restraining JBCG and Centrum from transferring, marketing, pledging or otherwise creating any encumbrance over Unity Bank’s Series 1 and Series 2 warrants without its prior written consent. It has also sought directions restraining Unity Bank from registering or giving effect to any such transactions.

Justice Tushar Rao Gedela issued notice in the matter on September 9. The respondents have been granted two weeks to file their replies, following which BharatPe will have three days to file a rejoinder. The matter is next listed for consideration on October 1.

The dispute relates to approximately 190 crore warrants allotted to Centrum in November 2021. BharatPe holds a 49% stake in Unity Small Finance Bank, while Centrum holds the remaining 51%.

According to BharatPe, it contributed approximately ₹746 crore towards the repayment of depositors of the erstwhile Punjab and Maharashtra Cooperative Bank as part of the process leading to the establishment of Unity Small Finance Bank.

BharatPe has alleged that JBCG transferred approximately 6.74 crore Series 1 warrants and 4 crore Series 2 warrants. It has further alleged that JBCG and Centrum created encumbrances over approximately 15 crore Series 1 warrants and 16.92 crore Series 2 warrants without obtaining its prior written consent.

One of the transactions referred to in the petition concerns the alleged pledge of 8 crore Series 2 warrants by JBCG in favour of Vistra ITCL (India) Limited, acting as trustee for UTI Alternatives. BharatPe claims that JBCG raised ₹200 crore against the warrants and subsequently transferred 4 crore of the warrants to UTI Alternatives schemes.

The petition also raises concerns regarding the valuation at which the warrants were transferred. According to BharatPe, Centrum had initially subscribed to the warrants at Re 0.01 per warrant before transferring 50 crore warrants to JBCG at Re 0.16 per warrant.

BharatPe has further stated that it “reasonably believes” that JBCG subsequently offered the warrants to third parties at approximately ₹26 per warrant.

The dispute has also moved towards arbitration. BharatPe invoked arbitration on August 11 and nominated former Supreme Court judge Justice Vineet Saran as its nominee arbitrator.

The present proceedings follow an earlier Section 9 petition in which the Delhi High Court had restrained the respondents from proceeding with a proposal relating to the conversion of the Series 1 warrants.

Resilient Innovations was represented by Advocates Mohit Goel, Sidhant Goel, Anuj B, Deepankar Mishra, Aisha Jain, Shashwat Mukherjee, Ishaan Pratap Singh, Suradish Vats and Darpan Sachdeva of Sim & San.

JBCG was represented by Senior Advocate Rajshekhar Rao, along with Advocates Ashish Aggarwal and Nalin Dhingra.