Essel Group Takes Kotak AMC to NCLT Over Financial Dispute

Kotak Asset Management Company (AMC) has been hauled to NCLT by an Essel Group subsidiary, which is claiming INR 12.99 crore in unpaid debts. The case was filed in May and was heard by the Mumbai bench of the NCLT.

The petition has been submitted in the case by Konti Infrapower and Multiventures, a unit of the Essel Group. According to Konti Infrapower's argument, Kotak AMC received an advance of INR 12.99 crore in order to fulfil certain obligations resulting from the Non-Convertible Debentures (NCD) issue.

Following the conclusion of SEBI's regular yearly examination of the AMC, the AMC was required to reimburse the sum.

In its plea, Konti Infrapower stated that the applicant, via demand notice dated 19 February 2025, among other things, called on the Corporate Debtor to release the outstanding amounts as a pro tem measure because the Corporate Debtor had failed and neglected to fulfil its contractual obligations as stipulated under the Agreement dated 6th April 2019. As of right now, the Corporate Debtor has not paid the Financial Creditor.

Findings of SEBI’s Investigation

The agreement stated that the money given to Kotak AMC would be returned to Konti Infrapower following the conclusion of SEBI's initial examination of the AMC, according to the petition copy. The SEBI inspection took place between April 2019 and March 2020, and a report was issued by SEBI after the inspection.

Additionally, the funds that were loaned were to be reimbursed following the fulfilment of the payments under the underlying NCDs to Kotak AMC unit holders. According to Konti Infrapower, on July 6, 2022, it sent two letters to Kotak AMC requesting the release of the agreed-upon payments. On July 28, 2022, Kotak AMC responded, saying SEBI's inspection was not finished.

According to Konti Infrapower, a report dated March 28, 2023, has been prepared following the completion of the SEBI inspection of Kotak AMC, which is the catalyst for the company's money repayment.

Additionally, Kotak AMC paid back unitholders and liquidated its NCDs. The issue concerns the Rs 20-crore NCDs that were subscribed for by Kotak AMC of Essel Group companies using listed equity shares of Zed Entertainment Enterprises Limited as the underlying security.

Kotak AMC Sold NCDs of INR 20 crores to Specific Investors

In February 2019, Kotak AMC sold the NCDs for INR 20 crores to a few additional investors, and the IN 12.99 crore advancement was solely related to this portion. According to a representative for the Essel Group, Konti Infrapower had raised funds from Kotak Mutual Fund in the form of NCDs.

In September 2019, Kotak Mutual Fund received the full payment under the NCDs. The spokesman also mentioned that in April 2019, Konti Infrapower had made a separate payment to Kotak AMC Ltd that Kotak AMC was to reimburse to Konti Infrapower after reaching specific milestones.

Kotak AMC has fallen behind in its payments, and the aforementioned funds are due and payable. Consequently, Konti Infrapower has petitioned Kotak AMC to start the corporate insolvency resolution process (CIRP). The matter is pending in the Mumbai NCLT.