2021 (6) TMI 64 - Tri - Companies Law

Seeking to place before this Tribunal the proposed sale of equity shares of non-Applicant Group companies which are listed on stock exchanges in India - Oppression and Mismanagement - Sections 241 and 242 of the Companies Act, 2013 - HELD THAT - The Respondent has not made any objection to the Application. It is submitted that the relief sought is in the interest of the selling companies and their stakeholders. Considering the facts and circumstances of the case the proposed sale of shares as mentioned in Para 14 above held by IFIN and IMICL can be taken on record in accordance with the approval of Hon ble Justice Mr. D. K. Jain (Retd.) dated 12/12/2019. The selling entities can be permitted to consummate the sale of the listed shares. The Application be and the same is allowed.

Issues Involved:
1. Proposed sale of equity shares by IL&FS Financial Services Limited (IFIN) and IL&FS Maritime Infrastructure Company Limited (IMICL).
2. Allegations of mismanagement in IL&FS.
3. Supersession of the Board of Directors of IL&FS.
4. Resolution Framework for IL&FS Group.
5. Role of NCLAT and Hon'ble Justice Mr. D. K. Jain (Retd.) in the resolution process.
6. Approval and execution of the sale of listed shares.
7. Application of sale proceeds.

Issue-wise Detailed Analysis:

1. Proposed Sale of Equity Shares by IFIN and IMICL:
The application before the Tribunal concerns the proposed sale of equity shares owned by IL&FS Financial Services Limited (IFIN) and IL&FS Maritime Infrastructure Company Limited (IMICL), both subsidiaries of the Applicant. The shares are listed on Indian stock exchanges.

2. Allegations of Mismanagement in IL&FS:
The Union of India filed a petition under Sections 241 and 242 of the Companies Act, 2013, alleging mismanagement in IL&FS. This led to the Tribunal superseding the Board of Directors of IL&FS on 01/10/2018.

3. Supersession of the Board of Directors of IL&FS:
The Tribunal constituted a new Board with six Directors to manage IL&FS. Additional Directors were appointed subsequently. The new Board was tasked with furnishing a roadmap for the Tribunal's consideration.

4. Resolution Framework for IL&FS Group:
The new Board submitted periodic progress reports and proposed a Resolution Framework on 17/12/2018. The framework suggested an 'Asset Level Resolution' for the IL&FS Group, including the sale of business verticals or winding up of non-operational entities.

5. Role of NCLAT and Hon'ble Justice Mr. D. K. Jain (Retd.) in the Resolution Process:
NCLAT orders dated 11/01/2019 and 04/02/2019 emphasized a process similar to the 'Corporate Insolvency Resolution Process' and allowed the engagement of Hon'ble Justice Mr. D. K. Jain (Retd.) to supervise the resolution. The resolution of Offshore IL&FS Entities was excluded from the purview of the 15/10/2018 order and was to be supervised by Justice Jain.

6. Approval and Execution of the Sale of Listed Shares:
The New Board approved the sale of listed shares held by IFIN and IMICL. The sale was proposed to create liquidity and maintain the 'Going Concern' status of the entities. Justice Jain approved the sale on 12/12/2019, and the Applicant sought the Tribunal's permission to proceed with the sale.

7. Application of Sale Proceeds:
The sale proceeds are intended to meet the operational expenses of the selling entities, support the resolution process, and benefit the lenders of the relevant entities.

Conclusion:
The Tribunal, after considering the application, the approval of Justice Jain, and the absence of objections from the Respondent, allowed the proposed sale of shares. The sale is in the interest of the selling companies and their stakeholders. The application was allowed without contest, with no order as to costs.

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