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TMI Blog2021 (10) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... y and Bankruptcy Code, 2016 ("The Code") seeking appropriate directions for effective implementation of the resolution plan approved by this Tribunal 2. That the Applicant has sought following reliefs in its Application: a) "Direct the Respondent No. 1 and 2 to transfer 256,53,813 equity shares of the respondent No. 3 held by the respondent No. 1 and 2 in favour of Bamnipal Steels Limited, a wholly owned subsidiary of Applicant) in compliance of the terms of the Resolution Plan duly approved by this Bench vide its order dated 15.05.2018; b) Pass any other and such order as this Bench may deem appropriate and necessary." 3. The facts leading to the Application may be stated as under: a) The Corporate Insolvency Resolution Process (CIRP) of Respondent No. 3 viz M/s Bhushan Steels Limited has been initiated on 26.07.2017. b) The Resolution Plan has been submitted by the Resolution Applicant viz M/s Tata Steels Limited on 03.02.2018 c) This Bench has approved the Resolution Plan submitted by the Applicant viz M/s Tata Steels Limited on 15.05.2018. 4. The counsel for the applicant submitted that, the Bamnipal Steels Limited is being the wholly owned subsidiary of Bhushan St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Applicant shall subscribe to 79,44,28,986/- equity shares of the company at the face value of Rs. 2 per shares. Further, the Resolution Applicant shall on the closing date, purchase and the existing promoter group shall be bound to sell, all the shares held by the existing promoter group (i.e., 256,53,813 equity shares) for a consideration of Rs. 2 per share, such that the Resolution Applicant holds 75% of the fully paid-up equity share capital of the company. Upon the plan being approved by the AA, the terms of this plan including Annexure 5 are deemed to be accepted by the Existing Promoter Group in their capacity as shareholders of the Company." As a result of such issuance, the shareholding pattern of the company shall be as indicated in the table below: S.No. Shareholding Post Primary Share Issuance 1. The Resolution Applicant 794,428,986 72.65% 2. Existing Promoter Group 256,53,813 2.35% 3. Security Trustee on behalf of the Pledge holding Financial Creditors 146,802,524 13.43% 4. Other Public Shareholders 1265,58,409 11.57% Total 1,093,443,732 100.00% S.No. Shareholding Post Transfer of shares by existing promoter gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Approve Resolution Plan, which is in respect of the pledged shares. Further it demanded that the Applicant shall buy the unpledged shares at the current prevailing price which is at the rate of Rs. 27.90 per share, The contents of clause 6 in respect of treatment towards Pledge shares are reproduced below: "6 Acquisition of the Pledged shares by the pledge holding Financial Creditors On the Closing Date the pledge holding Financial Creditors of the Company shall acquire the Pledge Shares for a consideration calculated at a price per share equal to the prevailing price of equity shares of the Company on the RSE Limited as at close of trading hours on the last trading date immediately preceding the date of invocation ('Pledge Consideration'. The Outstanding Financial Debt shall stand reduced to the exact of the Pledge Consideration" 13. The Respondents further submitted that the applicant seeking relief in this application is in direct contravention of the approved resolution plan; However, by which the applicant is attempting to create an illegal windfall with the intention of amending the approved resolution plan which stood approved more than 3 years ago and now att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be counted towards achieving compliance with minimum public shareholding requirement under rule 19A of the securities Contract Rules, 1957, and provisions of these regulations. c. The event of re-classification shall be disclosed to the stock exchanges as a material event in accordance with the provisions of these regulations. d. Board may relax any condition for re-classification in specific cases if it is satisfied about non- exercise of control by the outgoing promoter or its persons acting in concert. 18. However, it is further submitted by the respondents that; in any case the regulation 31A(7)(b) of the SEBI (Listing Obligations and Disclosure Requirements) is applicable in case of increase in level of public shareholding pursuant to re classification, which is evident from the letter of BSE dated 25.06.2018 the public shareholding, post reclassification, has reduced from 83.28% to 27.35%. 19. Per contra it is stated by the applicant in its written submission that as per the rule 1 9A of the Securities Contracts (Regulation) Act, 1956 where every company including BSL which is a listed company, mandatorily required to maintain minimum public shareholding of at least 25% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion plan. 27. After, hearing the submissions from both the parties, perusing the documents placed on record, written submissions of the parties, this Bench observes that, In the present application, the applicant raised only one issue with respect to non-transfer of 256,53,813 unpledged equity shares of Bhushan Steels Limited to its wholly owned subsidiary viz Bamnipal Steels Limited for a consideration of INR 2.00/- per share (which is the same price as the price at which the Bamnipal is subscribing to the equity shares) in compliance to the terms of approved resolution plan dated 15.05.2018. 28. However, no matter whether the Option 1 or the Option 2 is exercised by the Successful Resolution Applicant, the position with respect to the share price would remain same INR 2/-. If the SEBI guidelines does not allow the erstwhile promoter group as part and parcel of the new promoter group, there is no right vested with the erstwhile promoters to hold on to the shares and to remain in the company as shareholders by the virtue of the resolution plan. Even in case of the Option 2, if the existing promoter group as per the resolution plan hold 75 % shareholding, the erstwhile promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retation of the same shall result in modification in the terms of the Resolution Plan which is not permissible in light of the law laid down by the Hon'ble Supreme Court in the matter of Ebix Singapore Private Limited Vs Committee of Creditors of Edu comp Solutions Limited & Anr. Civil Appeal No. 3224 of 2020 dated 13.09.2021. The extract of the relevant portion is reproduced below: "203...... In this context, we hold that the ezi sting insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC approved Resolution Plans, at the behest of the successful Resolution Applicant once the plan has been submitted to the Adjudicating Authority." 36. However, 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. 37. Therefore, it is clear that; its mere a purpose of unjust enrichment on the part of Respondents and to create an obstruction in the implementation of the approved Resolution Plan. The approved resolution plan clearly states that "the resolution applicant shall on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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