Mumbai: The trustee of the debenture holders of Reliance Capital has approached the Bombay High Court to protect its investment in Reliance Capital, which holds shares of its subsidiary Reliance General Insurance Company (RGIC). The trustee is seeking the court’s intervention to restrain Nippon India Mutual Fund, Nippon Life India Asset Management and IDBI Trusteeship from dealing with pledged shares of RGIC. Vistra ITCL is a debenture trustee for the non-convertible debentures (NCDs) and was appointed by the Reliance Capital as trustee in respect of secured redeemable nonconvertible debentures of aggregate nominal value of Rs 5,000 crore.

The trustee entered into the trust deed in October 2016 with regards to the security of its debenture holders, which is the investment of Reliance Capital in the shares of RGIC.

Emailed queries to Nippon India MF, and Reliance Capital remained unanswered.

Nippon Life India Asset Management, IDBI Trusteeship, RGIC could not be contacted immediately. Vistra ITCL declined to comment as a court is yet to pass a verdict on the subject. The trustee has claimed in its petition that both Nippon India MF and Nippon Life India Asset, while seeking exclusive rights on more than 250 million shares of RGIC, ‘purportedly pledged with them by Reliance Capital’, has appropriated the shares of the RGIC to itself.

Those shares are currently in the demat account of IDBI Trusteeship. The trustee, Vistra ITCL, formerly known as IL-FS Trust Company claims that these are the same shares that constitute a part of the security furnished by Reliance Capital in favour of the petitioners. “It has further come to plaintiff’s (Vistra’s) knowledge that the defendant 1 and 2 (Nippon firms) are also in the process of taking steps to sell the said shares of RGIC to third parties,” said the trustee in its petition filed in the court, a copy of which was reviewed by the ET.

“However, such transfer of the shares of RGIC and attempt to sell the share to any third party has been found to be in violation of various provisions of the Insurance Act.” The trustee now claims that it has a charge over RGIC shares. The genesis of the dispute lies in the alleged other charge created by the company in favour of local subsidiaries of the Japanese financial behemoth.

“The pledge created in favour of the defendant Nos.1 and 2 (Nippon Cos) through defendant No 3 (IDBI Trusteeship) is void and has no effect in law,” Vistra ITCL said.