TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1278
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.... Private Limited), Mr. Gopal Subramanium, Senior Advocate Dr. UK Chaudhary, Senior Advocate, Mr. Arun Kathpalia, Senior Advocate Mr. R Chandrachud, Advocate, Mr. Vishnu Mohan, Advocate For R-2 (Aakash Educational Services Limited) JUDGEMENT Per Justice N. Seshasayee, Member (Judicial) 1.1 M/s Think and Learn Pvt. Ltd (henceforth would be referred to as TLPL) was holding about 25.41% shares in M/s Akash Education Services Ltd., (henceforth would be referred to as Akash). TLPL is now being exposed to a CIRP vide an Order of the Adjudicating Authority, dated 16.07.2024 in C.P.149/BB/2023. The RP has since been appointed. The CoC of TLPL is principally constituted of M/s Glas Trust Company, the appellant herein (henceforth would be referred to as Glas Trust), and it is stated to have 99.41% voting share. 1.2 Be that as it may Akash now proposes to hold an extraordinary General Body meeting to increase its authorised share capital. Alleging that the increase in the share capital of Akash would reduce the percentage of shareholding of TLPL from about 25% to about 5% and dilute its value of the shares, Glas Trust, the principal member of the CoC of the TLPL, has approached ....
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....articles which granted certain pivotal authority to TLPL in the affairs of Akash. 2.3 Glas Trust, the major financial creditor of TLPL would now file I.A.835 of 2024 in the C.P.149/BB/2023 (vide Order in which TLPL was admitted to CIRP) against the RP of TLPL (and without Akash in the party array) seeking inter alia a direction to the RP to maintain status quo and to direct that RP should not cast any affirmative vote for the approval of any of the proposed amendment to the Articles of Association of Akash. On 19.11.2024, the Adjudicating Authority had passed an order to the effect that "no consequential action can be taken according to the Board meeting held on 21.10.2024". This Order is now under challenge in C.A.50 of 2025 by Akash, principally on the ground that it was not heard in the matter. 2.4 Subsequent to the passing of the board resolution dated 21.10.2024 for amending its AoA, Akash convened its General Body meeting on 20.10.2024, notwithstanding the order of the Adjudicating Authority passed on the previous day (19.10.2024) directing not to give effect to the said resolution, but it may be understood that it was directed only against the RP of TLPL and in the abs....
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....wever, owing to the superannuation of the judicial member of that bench, no Order in these appeals could be delivered, and these appeals are now pending before us for fresh hearing. 4. Now, on 04.10.2025, the Board of Akash has passed two separate resolutions. Cumulatively taken, these two resolutions show that the Board of Akash has resolved to increase the share capital through right issue at the face value of the shares and that Board "can decide how to deal with the unsubscribed portion of the right issue." On the same date, notice was also came to be issued calling for an extraordinary general body meeting of the shareholders of Akash which is scheduled to take place on 29.10.2025. 5. One another fact that requires a mention is that TLPL has in the meantime laid at least two petitions under Sec.241 and 242 of the Companies Act through its RP against Akash alleging that there are issues of oppression and mismanagement. One of the petitions is C.P.46 of 2025, in which TLPL sought an order that its shareholding in Akash should not be diluted. On 27.03.2025, the NCLT has passed an interim order of status quo and that order continues till date. 6. It is in these circumstan....
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....reholding should not be diluted, the NCLT has passed an interim order of status quo and that order continues till date. This implies that the present move of Akash to increase the share capital through right issue will be in violation of the said order of status quo; and secondly, given the circumstance where TLPL renouncing the shares that it might be offered is a stark reality, the Board of Akash has decided that it would deal with such shares which were so renounced. This can directly affect the shareholding of TLPL in Akash. d) Thirdly, Sec.60(5) of the IBC enables the Tribunal constituted thereunder to proceed even against the subsidiaries of CD. 8. Per contra, Akash would argue: a) That the decision to amend the Articles of Association of Akash was necessitated pursuant to the Debenture Trustee Agreement dated 25.04.2023, when Akash chose to raise finance through issuance of debentures. In other words, amendment to AOA as has been undertaken by the Board and the General Body of Akash was not designed to deplete the asset value of TLPL, but intend to protect its own interest, and in pursuance of its commitment under the Debenture Trust Deed executed at lea....
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....D comes under the scanner of IBC, what becomes significant is that no decision taken by the subsidiary company to increase its share capital cannot be related to any event that might have taken place before the CD was admitted to CIRP. Discussion & Decision 10. The General body meeting of Akash is scheduled to take place on 29.10.2025, and the arguments of the counsel on either side were heard at length on 27.10.2025, which extended well beyond the sitting time of this tribunal. The point is whether Glas Trust and the RP of TLPL have established the triple criteria necessary for stalling the General body meeting of Akash on 29.10.2024? 11. First to the existence of a strong prima facie case to support the relief now sought: a) When the Adjudicating Authority passed its Order on 19.11.2024 directing that the Board resolution of Akash to go for the amendment of its Articles, the extent to which it may bind Akash needs to be considered in the pending C.A.50 of 2025. Admittedly Akash was not a party to that proceeding. And inasmuch as Akash has its corporate personality well in tact and distinct from its shareholders and its own board of directors, prima facie it appe....
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....ed, then no matter what the earlier events which may justify a decision such as the one Akash has taken for amending its articles should not be taken note of is concerned, it attempts to stretch the scheme of IBC excessively. It can be explained. Akash has its existence as a juristic person and has its independent right to survive commercially. Jurisprudentially a company and its controlling entities are not the same. If a company has a right to commercial existence to benefit its shareholders, the fact that some among those who held the controlling power is exposed to CIRP cannot be stretched to the extent of enabling the right of such company to protect its right to commercial existence. And for any company, its commercial existence is a journey through the tides of time which its navigators - the board of directors, would monitor. Accordingly, when the board of Akash opted to issue debentures to raise finance more than a year before TLPL was admitted to CIRP, it was one of the decisions which its board has taken in its journey for survival commercially. And, if it eventually necessitated amending the articles of association, it can never be taken in isolation and can be analysed....