Rights issue by subsidiary: NCLAT leaves it to NCLT bench to decide on Srei Infrastructure Finance plea

The National Company Law Appellate Tribunal (NCLAT) on Wednesday left it to the Kolkata bench of the National Company Law Tribunal (NCLT) to decide on a plea by Srei Infrastructure Finance (SIFL) seeking to restrain its subsidiary Trinity Alternative Investment Managers (Trinity) from going ahead with a rights issue.

SIFL had sought an injunction against Trinity from proceeding with the rights issue as “it was being issued with a motive to dilute the shareholding of the appellant (SIFL) in the respondent company (Trinity)”. The NCLT had ordered “status quo” in its December 6 order.

SIFL is a non-banking financial company and the respondent, Trinity, is a subsidiary in which it has 51% holding. The remaining 49% is with Payaash Capital Singapore Pte Ltd.

Challenging NCLT’s interim order, SIFL appealed before the NCLAT as it “effectively restrained the appellant, the 51% shareholder from exercising its statutory rights”.

In its judgement, the two-member NCLAT bench said, “Though we are conscious of the fact that there is an order of status quo in a petition filed by the appellant in the absence of any prayer to that effect/issue, we observe that NCLT has not passed any order on the merits of the case on hand.”

“On a careful consideration of the contentions projected by both sides, and the pleadings put forward, this tribunal, keeping in mind the ingredients of Section 241 and 242 of the Act, arrives at the resultant conclusion, without expressing any opinion on the merits of the matter, also not delving deep into the case, as allegations of ‘oppression and mismanagement’ consist of mixed questions of fact and law, which cannot be decided at this interim stage, directs the NCLT Kolkata Bench to take up the matter on February 18, without any further adjournments, dealing with all issues raised, in accordance with law.”