The National Company Law Appellate Tribunal (NCLAT) has stayed the NCLT order directing Ratan India Finance to appoint its JV partner nominee Bipin Kabra as its CFO till July 6 – the next hearing date.
Earlier, on March 29, a New Delhi-based bench of the National Company Law Tribunal (NCLT) directed the appointment of Kabra as its Chief Financial Officer (CFO) on an application filed by RattanIndia Finance’s JV partner – LSF 10 Rose Investments. .
LSF 10 Rose Investments, US-based private equity firm Lone Star Funds (LSF), a non-banking finance company, has a 50 percent stake in RattanIndia Finance (RF).
Rajiv Ratna, Anjali Nasir and the Hamlin Trust Appeal Tribunal challenged the order in the NCLAT.
A three-member NCLAT bench issued notice to LSF 10 Rose Investments within two weeks. It allows the applicant to file a reply a week later, if any, and directs the matter to be listed for hearing on July 6.
“Until the next date of the hearing, the operation of the obsolete order dated March 29, 2022 will be suspended,” NCLAT said.
Earlier, LSF 10 Rose Investments submitted an interim application for the appointment of an independent professional and full-time CFO for RattanIndia Finance on the terms of the company’s Articles of Association (AoA).
It was approved by the NCLT after observing that it had the right to nominate the company’s CFO (LSF), according to an article by the JV company RattanIndia Finance Association.
The tribunal also agreed with the private equity firm’s submission that its partners do not have the right to contest the “Petitioner’s Validity (LSF 10-day) nomination.”
According to Article 140 of the AoA of RattanIndia Finance, the LSF has the right to nominate a person as CFO and if the JV partner refuses to hire the first nominee, the LSF will nominate the second nominee.
And if the JV partner refuses to hire a second nominee, LSF 10 Rose Investments will have the right to nominate any person as CFO and the JV partner will support it.
The private equity firm submitted that the JV partner had already rejected the name of the second person, Venkataraman Subramanian, and then proposed Bipin Kabra as the third name.
However, this was also not agreed upon by the JV partner, after which LSF 10 Rose Investments approached NCLT.
The 12-page NCLT order stated that “under the provisions of the Companies Act, 2013, Bipin Kabra will submit an affidavit before this tribunal within 2 weeks that he will abide by the requirements.”
LSF 10 Rose Investments has already filed a petition with the NCLT alleging mismanagement and harassment of minority shareholders under sections 241 and 242 of the Companies Act, 2013.
The matter is currently pending before the NCLT.