TaxTMI 
TaxTMI 
2021 (10) TMI 1308
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....ction 60(5) (a) & (c) of the Insolvency 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,....
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....re indicated above in this step 3. The Option 2: On the closing date, the Company shall issue, by way of preferential allotment, and the Resolution 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 14....
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.... of the Resolution Plan Submitted by Tata Steel Limited. 23.95 10.10.2018 Current Share Price 27.90 12. Thereafter, counsel for the respondents has submitted that all the equity shares owned by the respondents must be treated equally in light of clause 6 of the 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 ....
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....5) and (6), re classification of promoter as public shareholders shall be subject to the following conditions:" a. Such promoters shall not, directly or indirectly, exercise control over the affairs of the entity. b. Increase in the level of public shareholding pursuant to re-classification of promoter shall not 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 shareholdi....
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....t of the above it is further submitted that Bamnipal a wholly owned subsidiary of the applicant issued a letter dated 18.05.2018 exercising option 2 as per the approved resolution plan, requesting respondent no. 1 and 2 to transfer 256,53,813 unpledged shares. Till date respondent no. 1 and 2 has refused to sell its shares in accordance with the approved resolution 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 ....
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....not merit consideration since the clause 6 solely deals with the pledged shares. 35. If unpledged shares are allowed to be transferred at the market price, then the same will result in modification in the terms of the resolution plan. Since, the resolution plan has a specific clause dealing with a specified rate INR 2.00 with respect to unpledged shares. Any other interpretation 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 b....