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2023 (12) TMI 1151 - AT - Companies LawLocus to maintain the appeal - Board of Directors of LITL illegally reconstituted in the absence of IDBI having attended the meeting - Appellants not heard before passing the Impugned directions - undergoing change in the management, pursuant to the approval of the Acquisition Plan - HELD THAT - In the instant case LITL in whose name the Shares still stood, is a person aggrieved as the admitted fact is that second tranche of consideration for the transfer of Shares remained unpaid. There are no hesitation to hold that the Appellant s legal rights have been affected and hence, falls within the ambit of the definition of person injured or damaged in a legal sense . Therefore, it is observed that the Appellants Appeal is maintainable, specifically having regard to the fact that the Second Appellant M/s. KRS Erectors has purchased the First Appellant Company as a Going Concern on an as is where is basis and is a person aggrieved as its pecuniary interest is directly affected. Appellants are aggrieved parties as the title of the CCPS still stands in their name and not hearing the Appellants and giving such directions would construe violation of Principles of Natural Justice. Needless to add, the Second Appellant/M/s. KRS Erectors Private Limited, which is the Company having acquired the First Appellant Company as a going concern is an aggrieved party and it has the locus to file this Appeal. It is the main case of the Respondent that the subject 42,00,00,000 CCPS falls outside the scope of the approved Acquisition Plan. It is the case of the Appellants that Clause 5.10 of the Acquisition Plan makes it clear that unearned receivables pertaining to the period prior to the initiation of the CIRP other than those specified which are realised after the approval of the Resolution Plan shall be shared equally between the First Appellant and the stakeholder - It is not in dispute that in the Register of Members of the Sixth Respondent Company shows that 42,00,00,000 CCPS were held in the name of the First Appellant. The case of the Respondent that the second tranche of consideration was not paid as contemplated under the SPA dated 30.03.2012 only because the Appellant had failed to obtain the approval of the lenders and the payment was conditional to the approval, cannot be sustained as a ground for the said directions as the fact remains that the said Agreement was admittedly amended from time to time on account of non-approval of the lenders and the balance consideration for the said 42,00,00,000 CCPS was not paid and hence, the question of the contract having been concluded and the Shares thereafter being held in trust by LITL does not arise. If the terms of the Agreement have been adhered to, then the question of the Shares being held in trust by LITL would come into the picture. The sum and substance of Clause 3.2(ii)(c) of the SPA is that LITL shall arrange the necessary approvals from the Lenders in whose favour such shares are pledged or Non-Disposal Undertaking is created; REPL shall accede under the terms of the financing documents as may be required by the Lenders and that LITL shall get dematerialisation of these shares, until such time, the said shares would be held in trust by LITL for REPL, however, in the books of the Company, the name of LITL shall continue as holder of these shares. It is seen from the record that the subject CCPS do not form part of the Assets of the Process Document and neither fall in the exclusions list and when the Shares are still in the name of the First Appellant Company which were required to be transferred to REPL subject to the amount received and receipt of approvals from the lenders of Lanco Anpara, we are of the view that the subject CCPS could not have been transferred without the payment being received and also without the consent of the Monitoring Committee of the Second Appellant Company - The conduct of the Respondents in transferring the shares during the pendency of the Appeal specifically when the matter was being heard at length due to the chequered history and the fact that the Impugned Order did not reflect the factual matrix, is not appreciated. Though initially, it was opined that this matter be sent back to the Adjudicating Authority for hearing afresh, keeping in view that substantial time has been spent before this Tribunal in understanding the factual matrix of the matter and the matter was heard at length over a considerable period of time, and having regard to the fact that IBC is a time bound process, it is held that the Appeal itself be decided. The Impugned Order passed by the Adjudicating Authority is set aside and any actions taken by the Respondents during the pendency of the Appeal are rendered otiose - appeal allowed.
Issues Involved:
1. Locus Standi of the Appellant to File the Appeal. 2. Justification of the Adjudicating Authority's Directions Regarding Transfer of Shares. 3. Compliance with Principles of Natural Justice. Summary: 1. Locus Standi of the Appellant to File the Appeal: The Appellants argued that they are necessary parties being substantially interested in the subject matter of IA No. 816/2023. The Adjudicating Authority, in gross violation of the Principles of Natural Justice, passed the Impugned Directions without issuing notice to the Appellant, which had undergone a change in management. The Appellants are "persons aggrieved" as defined by the Supreme Court, having suffered a legal grievance due to the decision affecting their title to the shares. 2. Justification of the Adjudicating Authority's Directions Regarding Transfer of Shares: The Adjudicating Authority directed the Liquidator to assist in the transfer of 42,00,00,000 CCPS shares. The Appellants contended that the second tranche of consideration for the transfer of shares remained unpaid, and the conditions stipulated in the SPA were never satisfied. The SPA and its amendments made it clear that until the full consideration is paid, LITL will have a charge on the unpaid amount. The Monitoring Committee had sought a legal opinion on this issue, which was pending, but IDBI filed IA No. 816/2023 without issuing notice to the Appellants. The Tribunal found that the Appellants' legal rights were affected, and the directions given without hearing the Appellants violated the Principles of Natural Justice. 3. Compliance with Principles of Natural Justice: The Tribunal observed that the Appellants were not heard before the Impugned Directions were given, which constitutes a violation of the Principles of Natural Justice. The Tribunal emphasized that the Appellants have locus to file the Appeal, and the directions given to the Liquidator in IA No. 816/2023 were unjustified, especially when the transfer of shares was disputed and the Monitoring Committee had sought a legal opinion. Conclusion: The Tribunal allowed the Appeal, set aside the Impugned Order passed by the Adjudicating Authority, and rendered any actions taken by the Respondents during the pendency of the Appeal otiose. All pending IAs were closed.
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