Sadhana Nitro Chem Limited (SNC) has disclosed an important legal update to the stock exchanges regarding a dispute involving the sale of its promoters’ pledged shares. According to the official filing dated 18th August 2025, the company informed that its promoters, Manekchand Panachand Trading Investment Company Private Limited, have obtained an ad-interim injunction order from the Hon’ble Bombay High Court.

The injunction, dated 14th August 2025 (and uploaded on 16th August 2025), restrains three entities — Badjate Stock Broking Private Limited, Badjate Stocks and Shares Private Limited, and Bonanza Portfolio Limited — from further sale of the company’s pledged shares. The promoters allege that these brokers engaged in the illegal invocation and sale of pledged shares, leading to losses and damages.

Background of the Dispute

Promoters often pledge their shares as collateral to raise funds. While this is a common practice in Indian markets, it comes with inherent risks. If promoters fail to meet margin calls or contractual obligations, lenders or brokers may invoke the pledge and sell shares in the open market.

In this case, Sadhana Nitro Chem’s promoters claim that the brokers acted illegally in invoking and selling the pledged shares, which led to financial and reputational damage. To counter this, the promoters approached the Bombay High Court and secured temporary relief in the form of an injunction order.

Legal Action and Relief Sought

The promoters, along with Manekchand Panachand Trading Investment Company Pvt. Ltd., have also filed a civil suit before the Hon’ble Bombay High Court. The defendants in the case include:

1. Badjate Stock Broking Private Limited

2. Badjate Stocks and Shares Private Limited

3. Bonanza Portfolio Limited

The promoters are seeking damages for the alleged illegal invocation and subsequent sale of shares. Importantly, Sadhana Nitro Chem Limited itself has been named as Defendant No. 6 in the case. While the company clarified that it is not directly responsible for the pledged share transactions, it has been made a party to the case as a stakeholder.

Company’s Response and Next Steps

The disclosure, signed by Abhishek A. Javeri, Managing Director of Sadhana Nitro Chem Limited, confirmed that the company is urgently obtaining independent legal advice to determine the best course of action. The management emphasised that its priority is to protect shareholder interests amidst this legal uncertainty.

The company has assured stakeholders that it will continue to provide timely updates on any material developments as required under SEBI’s disclosure norms.

Impact on Shareholders and Investors

Legal disputes involving promoter shares often create uncertainty in the stock market. When pledged shares are sold in large volumes, it can lead to sudden declines in stock price and raise concerns about promoter stability. The injunction obtained by the promoters provides temporary relief and prevents further erosion of ownership, but the case’s outcome will significantly influence investor confidence.

Shareholders will closely monitor:

• The court proceedings and final verdict.

• The company’s legal strategy and ability to safeguard promoter holdings.

• Any potential financial or operational impact arising from the litigation.

Role of SEBI LODR Regulations

The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These regulations require listed companies to immediately inform stock exchanges about significant events, including legal proceedings, that could impact shareholders or the company’s financial standing.

By making this disclosure, Sadhana Nitro Chem has demonstrated regulatory compliance and transparency, which is crucial for maintaining investor trust during contentious legal matters.

Broader Context: Pledged Shares and Market Risks

Promoter share pledging has been a sensitive issue in India’s capital markets. While pledging allows promoters to raise capital, it raises red flags for investors, as excessive pledging indicates financial stress. Moreover, if the market value of pledged shares falls, lenders often liquidate holdings, leading to sharp declines in stock prices.

In several past cases, disputes over pledged shares have escalated to litigation, highlighting the need for stronger risk management and transparent disclosures. The Sadhana Nitro Chem case underscores how quickly pledged share arrangements can turn contentious when disputes arise between promoters and brokers.

Future Outlook for Sadhana Nitro Chem

Despite the legal challenges, Sadhana Nitro Chem continues to operate in the specialty chemicals sector, a business with strong demand fundamentals in India and global markets. The company’s ability to manage this legal dispute, protect promoter holdings, and reassure investors will play a key role in shaping its market perception and stock performance in the near term.

The management’s decision to urgently seek independent legal advice suggests a proactive approach. If the promoters succeed in their claims and the injunction is upheld, it may restore confidence among shareholders. On the other hand, prolonged litigation could keep uncertainty alive, weighing on investor sentiment.

Conclusion

The legal update disclosed by Sadhana Nitro Chem Limited is a significant development for shareholders, as it involves promoter share pledging, injunctions, and alleged illegal sales by brokers. The Bombay High Court’s ad-interim injunction order provides temporary relief to promoters by preventing further share sales, but the legal battle is far from over.

By keeping shareholders informed and seeking independent legal guidance, Sadhana Nitro Chem has signalled its commitment to transparency and shareholder protection. Investors will now watch closely for further updates from the courts and regulatory filings, as the outcome of this dispute will directly influence the company’s future market stability and governance reputation.

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