Tribunal upholds order for Promoters to sell shares at INR 2/- per share

The Tribunal dismissed the Appeal, upholding the Adjudicating Authority's order for the Promoters to sell their shares at INR 2/- per share as per the Resolution Plan. The Tribunal found that the implementation of the Plan was in accordance with existing laws and regulations, and the Promoters were bound by the terms of the Plan.

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Issues Involved:
1. Compliance with the Resolution Plan by erstwhile Promoters.
2. Validity of the Resolution Plan's provision for selling shares at INR 2/- per share.
3. Determination of the closing date for the Resolution Plan.
4. Reclassification of promoter shares as public shares under SEBI regulations.
5. Implementation of the Resolution Plan in accordance with existing laws.

Issue-wise Detailed Analysis:

1. Compliance with the Resolution Plan by erstwhile Promoters:
The Appellants, erstwhile Promoters of Bhushan Steel Limited, challenged the order directing them to comply with the Resolution Plan by selling their shares to the Applicant at INR 2/- per share. The Adjudicating Authority had directed strict compliance with the Resolution Plan, which included the sale of shares held by the Promoters to the Applicant.

2. Validity of the Resolution Plan's provision for selling shares at INR 2/- per share:
The Resolution Plan approved on 15.05.2018 required Tata Steel Limited to subscribe to a specific number of equity shares and for the Promoters to sell their shares at INR 2/- per share. The Appellants argued that this provision was not permissible and that the shares should be reclassified as public shareholding. However, the Tribunal upheld the provision, stating that the Plan was binding and the Promoters were obliged to sell their shares as per the Plan.

3. Determination of the closing date for the Resolution Plan:
The Appellants contended that the closing date should be 25.06.2018, when the reclassification of shares was approved by the National Stock Exchange and Bombay Stock Exchange. However, the Tribunal held that the closing date was 18.05.2018, when Tata Steel implemented the Plan by subscribing to the equity shares and making payments to creditors.

4. Reclassification of promoter shares as public shares under SEBI regulations:
The Appellants argued that their shares should be reclassified as public shares, which would allow them to retain their shareholding. However, the Tribunal noted that Regulation 31A(7)(b) of SEBI regulations prohibited counting reclassified promoter shares towards public shareholding for achieving the minimum public shareholding requirement. The Tribunal upheld the Resolution Plan's provision for the Promoters to sell their shares to Tata Steel.

5. Implementation of the Resolution Plan in accordance with existing laws:
The Tribunal emphasized that the Resolution Plan must comply with existing laws, including SEBI regulations. The Plan provided two structures for share allocation, and the second structure was adopted due to the prohibition under Regulation 31A(7)(b). The Tribunal found no error in the Respondent's actions and upheld the Resolution Plan's implementation, including the sale of shares by the Promoters at INR 2/- per share.

Conclusion:
The Tribunal dismissed the Appeal, upholding the Adjudicating Authority's order for the Promoters to sell their shares at INR 2/- per share as per the Resolution Plan. The Tribunal found that the implementation of the Plan was in accordance with existing laws and regulations, and the Promoters were bound by the terms of the Plan.

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