Equity Shares Transfer Dispute: CIRP Approval Renders Petition Moot

The case involved disputes over the transfer of equity shares, jurisdiction of the Company Law Tribunal, validity of a pledge agreement, compliance with the Sick Industrial Companies Act, impact of winding-up proceedings, and developments during the Corporate Insolvency Resolution Process. The tribunal dismissed the petition as the resolution plan for the company had been approved under the CIRP, rendering the relief sought moot. The tribunal did not delve into the merits of the case due to the changed circumstances.

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Issues Involved:
1. Legality of the transfer of 1,80,00,000 equity shares.
2. Jurisdiction of the Company Law Board/Tribunal.
3. Validity of the pledge agreement and invocation of the pledge.
4. Compliance with the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
5. Impact of winding up proceedings on the transfer of shares.
6. Developments during the pendency of the case, including Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Legality of the Transfer of 1,80,00,000 Equity Shares:
The petitioners, promoters of M/s. Deccan Chronicle Holdings Ltd. (DCHL), challenged the transfer of 1,80,00,000 equity shares in favor of ICICI Bank Ltd. (Respondent No. 2), alleging it was illegal. They contended that the shares were pledged in good faith but were transferred without proper execution of the pledge agreement. The petitioners received notices from ICICI Bank regarding the invocation of the pledge due to non-repayment of dues, leading to the transfer of shares.

2. Jurisdiction of the Company Law Board/Tribunal:
ICICI Bank raised a preliminary objection regarding the jurisdiction of the Company Law Board, citing the provisions of section 1(3) of the Companies Act, 2013. However, since the matter was transferred to the National Company Law Tribunal (NCLT) after the abolition of the Company Law Board, this objection was deemed irrelevant.

3. Validity of the Pledge Agreement and Invocation of the Pledge:
ICICI Bank argued that the pledge of shares was valid and invoked due to the petitioners' failure to repay the dues. The bank provided evidence of various loan agreements and the creation of a pledge over the shares. The bank asserted that it had the right to invoke the pledge under the Indian Contract Act, 1872, and that the transfer of shares was in compliance with the pledge agreement.

4. Compliance with the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA):
The petitioners contended that DCHL was registered as a sick company under SICA, and any modification in shareholding required prior permission from the Board for Industrial and Financial Reconstruction (BIFR). They argued that the transfer of shares without such permission was null and void. However, ICICI Bank countered that the BIFR had rejected the company's reference, and the matter was pending adjudication before the Delhi High Court.

5. Impact of Winding Up Proceedings on the Transfer of Shares:
The petitioners argued that the transfer of shares was void under section 536(2) of the Companies Act due to ongoing winding-up proceedings against DCHL. ICICI Bank, however, maintained that as a secured creditor, it was entitled to enforce the security and realize its legitimate dues, notwithstanding the winding-up petitions.

6. Developments During the Pendency of the Case, Including Corporate Insolvency Resolution Process (CIRP):
During the pendency of the case, the Corporate Insolvency Resolution Process (CIRP) was initiated against DCHL, and a resolution plan was approved. Consequently, the petitioners ceased to have any interest in DCHL, and the reliefs sought became infructuous. The tribunal concluded that there was no need to delve into the merits of the case as the petitioners' claims had become moot due to subsequent developments.

Conclusion:
The petition was dismissed on the grounds that the reliefs sought by the petitioners had become infructuous following the approval of the resolution plan for DCHL under the CIRP. The tribunal did not find it necessary to address the merits of the case due to the changes in circumstances.

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