2021 (10) TMI 1308 - Tri - Insolvency and Bankruptcy

Seeking appropriate directions for effective implementation of the resolution plan approved by this Tribunal - non-transfer of unpledged equity shares of Bhushan Steels Limited to its wholly owned subsidiary - HELD THAT - At any stretch of imagination in any of the Option, there remains no vested right of the erstwhile promoter group to hold on to the company in any capacity, let alone as shareholders - In this scenario the attempts on the part of the erstwhile promoter group to remain in the company as shareholders either by interpreting the option 1 or option 2 cannot merit their case, in any manner for the reason they first of all ought not to have been given any place in the company at the time of the approval of the resolution plan. Assuming for a moment some accommodation was offered by the successful resolution applicant by graciously allowing the erstwhile promoter group to have 2.35 % stake in the company and it does not mean that they can hold on to 2.35 % forever nor can they claim market price for selling of shares - the erstwhile promoter group has no locus standi either to remain in the company or by falsely interpreting the Option 1 or Option 2. Above everything or on the top of it what is required to be understood is that at no point of time it is the understanding of the parties with respect to the approved resolution plan, that the erstwhile promoter group shall continue in the company with their shareholding or alternatively sell the shares at market value. The plea taken by the Respondent No.2 and 3 that the equal treatment shall be given to the price with respect to Pledge and Un-pledge shares, in terms of Clause 6 of the Resolution Plan, it does not merit consideration since the clause 6 solely deals with the pledged shares - If unpledged shares are allowed to be transferred at the market price, then the same will result in modification in the terms of the resolution plan. Since, the resolution plan has a specific clause dealing with a specified rate INR 2.00 with respect to unpledged shares. Any other interpretation of the same shall result in modification in the terms of the Resolution Plan which is not permissible. This is a settled piece of legislation in the insolvency domain; once a resolution plan is approved by the Adjudicating Authority all the promoters and stakeholders shall abide by it and not subject to any modifications - After analysing the entire scenario, the fraudulent manner in which the erst while promoter group is acting, only indicates that they would like to take advantage of a false, malicious interpretation of the clauses approved in the resolution plan and unjustly enriched themselves without any basis. In the view of the same, this Bench holds that the erstwhile promoter group has to sell away their shares to the applicant at INR 2/- per share without attempting to misinterpretation of the clauses in the approved resolution plan. All the respondent no. 1, 2 and 3 are directed to strictly comply with the plan forthwith - application allowed.

Issues Involved:
1. Transfer of equity shares as per the approved resolution plan.
2. Compliance with the terms of the resolution plan.
3. Interpretation of SEBI regulations and their impact on the resolution plan.
4. Allegations of unjust enrichment and obstruction in the implementation of the resolution plan.

Issue-wise Detailed Analysis:

1. Transfer of Equity Shares as per the Approved Resolution Plan:
The applicant, M/s Tata Steel Limited (TSL), sought directions for the transfer of 256,53,813 equity shares of Bhushan Steels Limited (BSL) held by the respondents to Bamnipal Steels Limited, a wholly-owned subsidiary of TSL, in compliance with the approved resolution plan. The resolution plan, approved by the Tribunal on 15.05.2018, mandated the purchase of all shares held by the erstwhile promoters, including the respondents, at INR 2 per share. The respondents failed to transfer the shares despite the plan's approval and subsequent directions.

2. Compliance with the Terms of the Resolution Plan:
The resolution plan provided two methods for TSL to acquire BSL's shareholdings:
- Option 1: Issuance of new shares by preferential allotment.
- Option 2: Purchase of existing promoter group shares at INR 2 per share.
TSL opted for Option 2 due to legal constraints on Option 1. The respondents did not comply with the transfer of shares as per the approved plan, leading to the current application for enforcement.

3. Interpretation of SEBI Regulations and Their Impact on the Resolution Plan:
The respondents argued that the shares should be sold at the current market price, citing SEBI regulations and the reclassification of their shareholding as public. However, the Tribunal noted that the resolution plan explicitly required the sale at INR 2 per share. The SEBI regulations cited by the respondents did not alter the terms of the approved resolution plan, which was binding and could not be modified post-approval.

4. Allegations of Unjust Enrichment and Obstruction in the Implementation of the Resolution Plan:
The Tribunal observed that the respondents' refusal to transfer shares at the stipulated price was an attempt to unjustly enrich themselves and obstruct the resolution plan's implementation. The approved resolution plan clearly stated the terms of share transfer, and any deviation would result in unauthorized modification, which is not permissible under the insolvency framework.

Conclusion:
The Tribunal directed the respondents to comply with the approved resolution plan and transfer the shares at INR 2 per share to Bamnipal Steels Limited. The application was allowed, and the respondents were ordered to adhere to the plan forthwith, ensuring effective implementation and preventing any unjust enrichment or obstruction.

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