Legal eagles believe that billionaire Gautam Adani is well within his legal rights to press his claim to a 29.18 per cent indirect stake in New Delhi Television (NDTV) by seeking to convert the warrants held by Vishvapradhan Commercial Pvt Ltd (VCPL) into shares of RRPR Holdings Pvt Ltd (RRPR).

The Adani group acquired VCPL on Tuesday and immediately pressed the button for the conversion of the warrants without initiating any discussion with NDTV founders Prannoy and Radhika Roy. On Wednesday, the NDTV stock leapt 5 per cent to a 14- year high at Rs 384.50 on the expectation that the Adani group would pour fresh money into the television channel.

The Roys have still not spelt out whether they intend to challenge the audacious move by the Adani group. However, in an internal note to employees, NDTV Group president Suparna Singh said: “We are in the process of evaluating steps, many of which involve regulatory and legal processes.”

She did not amplify. On Tuesday, the Adani group said they had exercised their right to convert the warrants held by VCPL which would give them an effective 99.5 per cent stake in RRPR. The Roys have been given two days’ time to hand over the shares in RRPR and it was not clear whether they would comply. Some observers said the matter could well land up in courts. However, legal experts told The Telegraph that the exercise of warrants held by VCPL or the call options that two VCPL subsidiaries hold may not be illegal.

Legal experts said the possibility of a legal challenge would depend on the resolve of the Roys to protect their turf in the face of this onslaught from a formidable rival and the nature of other clauses in the loan agreement.

“Structured debt transactions, where shares of the underlying entity form part of the collateral, are not unusual or illegal on the face of it, though they have been subject to debate from time to time.

“While the question of legality of the exercise of warrants in RRPR by VCPL may be subject to the nuances under the loan agreement, with the Securities and Appellate Tribunal (SAT) observing in June 2022 that the transaction between RRPR and VCPL needs to be interpreted in a business-like manner, there appears to be little wriggle room to question this acquisition and open offer,” said Saumya Ramakrishnan, counsel, Bombay Law Chambers.