BharatPe Takes Centrum, JBCG to Delhi HC Over Unity Bank Warrants

Centrum Financial Services Limited and JBCG Advisory Services Private Limited are being sued by Resilient Innovations Private Limited, the parent company of BharatPe. The charges include unlawful transfers and the development of encumbrances over warrants issued by Unity Small Finance Bank.

The case is being heard in the Delhi High Court. Subsection 9 of the 1996 Arbitration and Conciliation Act is the basis for the filing of the petition. The purpose of this request is to prevent, for the time being at least, the sale, marketing, or establishment of a security interest in the Series 1 and Series 2 warrants without the written agreement of BharatPe.

The Dispute Between BharatPe and JBC- Resilient

Centrum was allocated 190 crore warrants in November 2021, and this is where the controversy arises. Centrum owns 51% of Unity Bank and BharatPe, the other 49%. As part of the deal that created Unity Bank, BharatPe asserted that it paid back the deposits of the former Punjab and Maharashtra Cooperative Bank (PMC Bank) to the tune of about INR 746 crore. Around 6.74 crore Series 1 warrants and 4 crore Series 2 warrants were transferred by JBCG, as stated in the plea.

Additionally, BharatPe claims that Centrum and JBCG encumbered about 15.2 crore Series 2 warrants and 16.92 crore Series 1 warrants without first obtaining BharatPe's written consent. Unity Bank has been ordered by the court to refrain from registering or carrying out any transactions related to the contested warrants, as Resilient has also requested. On September 9, Justice Tushar Rao Gedela gave notice of the petition. The time for respondents to submit their responses is two weeks, and Resilient has three days to react. On October 1, the subject will be heard again.

Allegations of BharatPe

The 8 crore Series 2 warrants supposedly pledged by JBCG to Vistra ITCL (India) Limited, acting as trustee for UTI Alternatives, are one of the transactions mentioned by BharatPe. In response to the warrants, BharatPe asserts that JBCG raised INR 200 crore, INR 4 crore of which was allegedly transferred to UTI Alternatives schemes. The petition also mentions the transfer prices of the warrants.

The warrants were first subscribed to by Centrum for Re 0.01 each, and subsequently 50 crore warrants were transferred to JBCG at Re 0.16 each. JBCG allegedly offered the warrants for approximately INR 26 apiece, which BharatPe "reasonably believes" to be true. This is an ongoing case involving claims made by BharatPe.

The court had already taken into account the transfer provisions and the shareholders' agreement, as well as any other contractual constraints controlling the warrants, in that prior process. On behalf of BharatPe, Sim & San's Mohit Goel, Sidhant Goel, Anuj B, Deepankar Mishra, Aisha Jain, Shashwat Mukherjee, Ishaan Pratap Singh, Suradish Vats, and Darpan Sachdeva were appointed advocates.