January 25, 2009 12:21:31 am
The Supreme Court will take up a case related to the premature redemption of deep discount bonds by Sardar Sarovar Narmada Nigam Ltd (SSNNL) on February 23.
The provision for the premature redemption is allegedly a unilateral move aimed at depriving investors and bond-holders of their legitimate dues.
A bench headed by Chief Justice K G Balakrishnan tagged the two petitions filed by a trust of Hotel Janpath Employees Provident Fund and SSNNL Investors Grievance Forum with the Gujarat government’s plea seeking transfer of all related cases from Maharashtra to Gujarat.
Alleging that SSNNL,a public sector undertaking,cannot unilaterally seek premature redemption of deep discount bonds (DDBs),the petitions had challenged the SSNNL (Conferment of Power to Redeem Bonds) Act,2008,on the grounds that it was contrary to the guarantee given by the state.
The petitions also challenged the validity of SSNNL’s notice dated November 3,2008,informing investors about the early redemption of the bonds at a face value of Rs 50,000 on January 10,2009,and the payment of money through the electronic clearing system,which was contrary to the terms and conditions of the prospectus dated March 29,1993.
SSNNL had no call option unless the bond-holder prematurely encashed the bonds at the end of 7,11 and 15 years or on maturity on January 11,2014,at a maturity value of Rs 1,11,000,according to the trust.
As such,it is illegal and unjust on the part of SSNNL to seek premature redemption of DDBs after the expiry of 15 years from the date of issue,whereas these were issued for a period of 20 years. It amounts to breach of trust, said the petition filed through advocate A D N Rao.
SSNNL had issued non-convertible bonds and also DDBs in September 1993 to part-finance construction of the Sardar Sarovar Dam on the Narmada.
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