Adding another layer to the ongoing shareholder dispute at BharatPe-backed Unity Small Finance Bank (SFB), the Delhi High Court (HC) has rejected an appeal filed by the bank against an interim order.

The interim order restrains Unity SFB from placing a proposed capital restructuring resolution before its board without prior written consent from BharatPe parent Resilient Innovations (RIPL) and Centrum Financial Services.

The order, passed by a bench Justices C Hari Shankar and Vinod Kumar on November 5, restrains  Unity SFB from tabling, discussing or approving ‘Agenda Item 18’ at its board meeting without prior written consent from RIPL and Centrum Financial Services. The HC granted BharatPe the interim relief pertaining to the case earlier this year in July

The dispute stems from a Shareholders’ Agreement (SHA) signed between Unity Bank, RIPL and Centrum in October 2021, following their partnership to establish Unity SFB. 

The agreement features certain ‘Reserved Matters’ that would require prior written consent from representatives of both RIPL and Centrum. These include changes to the bank’s capital structure and amendments to its constitutional documents.

Agenda Item 18 proposed increasing Unity SFB’s authorised share capital from ₹4,000 Cr to ₹4,900 Cr by creating an additional 90 Cr preference shares of ₹10 each. The proposal also involved amending the bank’s Memorandum of Association (MoA) to facilitate the issuance of these shares.

RIPL opposed the proposal, arguing that the proposed capital restructuring could dilute its shareholding in Unity SFB from 49% to 21%. It contended that the resolution fell under the SHA’s Reserved Matters and therefore required prior written consent from both RIPL and Centrum.

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