2012 (8) TMI 1087 - HC - Companies Law

Summary

Issues involved: Locus standi of the applicant to intervene in Co. Petition u/s 101 of Companies Act, rights of the applicant as a shareholder, validity of the applicant's purchase of redeemable preference shares, impact of Corporate Debt Restructuring (CDR) on the shares.

The judgment by Hrishikesh Roy, J. of the Gauhati High Court pertains to a case where M/s. 3A Capital Services Ltd. sought to be included in a Company proceeding through Misc. Case No.963/2012.

Locus standi of the applicant: Mr. Choudhury, representing the opposite party, challenged the applicant's right to intervene in the Co. Petition u/s 101 of the Companies Act, arguing that the applicant must demonstrate their status as shareholders or creditors of the opposite party. He raised concerns about the applicant's bona fide, highlighting that the applicant failed to disclose their application u/s 111 of the Companies Act before the Company Law Board (CLB) Kolkata. Without a positive order from the CLB, Mr. Choudhury contended that the applicant lacked a reasonable basis to participate in the proceeding.

Rights of the applicant as a shareholder: The applicant's counsel, Mr. Barpujari, acknowledged that an application was indeed filed u/s 111 of the Companies Act to establish the applicant's legal rights as a shareholder. However, the CLB had not issued a final order on the matter, leaving the status of the applicant's claim unresolved.

Validity of the applicant's purchase of redeemable preference shares: The Court noted that the shares in question, purchased from ICICI Bank and later acquired by Standard Chartered Bank, were subject to potential cancellation under the CDR Scheme due to ICICI Ltd.'s involvement in debt restructuring. Given the uncertain status of the shares and the absence of a definitive ruling from the CLB, the Court expressed reluctance to recognize the applicant as a shareholder or creditor of the petitioner Company.

Impact of Corporate Debt Restructuring (CDR) on the shares: Considering the circumstances surrounding the CDR process and the risk associated with purchasing the shares, the Court emphasized the need for a clear declaration of the applicant's rights before allowing their intervention in the proceeding. Notably, the shares were acquired at a nominal price without involvement in any public issue or rights offering by the Company.

In conclusion, the Court found no merit in the applicant's impleading application, leading to its dismissal based on the lack of crystallized rights over the shares and the ongoing uncertainties regarding the validity of the purchase in the context of the CDR process.