Karnataka High Court Closes Morgan Securities' Contempt Plea Against BPL Over Alleged Property Encumbrance

The Karnataka High Court has closed a contempt petition filed by Morgan Securities and Credits Private Limited against BPL Limited and its directors over the alleged violation of a 2020 order restraining the company from alienating or encumbering its properties.

A Division Bench of Justice Jayant Banerji and Justice Tara Vitasta Ganju found that Morgan Securities had failed to produce documentary evidence of a breach. The court observed that the petitioner had not established that any of BPL's assets had actually been charged or pledged in violation of the order.

“Given that the complainant/petitioner has not placed on record any document reflecting either alienation or encumbrance of the properties of the accused No.1/company, the contempt petition is closed,” the court ruled.

The order dated July 10, 2020, restrained BPL Limited from alienating or encumbering its properties, including those already disclosed through affidavits, until further orders.

Morgan Securities alleged that BPL Limited and its directors were seeking to create charges or pledges over the company's tangible and intangible assets to secure loans. It relied on a resolution passed at BPL's extraordinary general meeting (EGM) on November 11, 2025, authorising the board to create such encumbrances.

The petitioner also argued that increasing BPL's subscribed share capital in favour of third parties, thereby diluting the controlling interest, would violate the restraint against creating third-party interests in shares. It relied on a Delhi High Court judgment to support this contention.

The Court examined the EGM resolution, which authorised the board to enter into or continue existing contracts with E.R. Computers Private Limited, a related party, up to ₹100 crore. The contracts were to be in the ordinary course of business and on an arm's-length basis.

The resolution also authorised the board to secure loans by creating charges or pledges over the company's tangible and intangible assets.

However, the court observed that Morgan Securities had not produced documents showing that the proposed transactions involved any of BPL's assets listed in its undated affidavit filed with the petition. It also noted that another annexure contained a list of BPL's trademarks, which was not relevant at that stage in view of the resolution.

The court granted Morgan Securities liberty to file a fresh petition in accordance with law if it obtains documents evidencing a breach of the July 10, 2020 order.

For Complainant: Senior Advocate S Basavaraj and Advocate Mahesh Arkalgud Srikanth