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The Ahmedabad bench of the National Company Law Tribunal has turned down a plea made by IFFCO to grant certain reliefs it had sought against its joint venture Triumph Offshore and JV partner Swan Energy, restraining them from passing any board resolutions pertaining to the issue of securities and substituting bank loan with promoters loan without its approval.
In an order on March 7, seen by businessline, NCLT said that no relief would be granted as the applicant (IFFCO) was also a director on the board of Triumph Offshore. Noting that the respondents, Swan Energy and Triumph had filed replies to the petition, the court directed IFFCO to file a rejoinder within seven days.
The court has also directed Triumph Offshore to convene a board meeting before the next hearing and “discuss the issues raised regarding feasibility and viability of offering of services to operate vessels and the inclusion of the applicant in the committee,” according to the memorandum of association.
The next hearing is scheduled for April 4.
Swan Energy and Triumph Offshore have filed affidavits in response, challenging the maintainability of IFFCO’s petition and seeking that no relief should be granted to IFFCO. The two companies said in their respective affidavits that the IFFCO petition was “frivolous, an abuse of the process of law” and further that IFFCO had failed to make out any case of oppression and mismanagement with respect to the affairs of Triumph Offshore. They accused IFFCO of mala-fide and malicious intent.
Triumph Offshore is a joint venture between IFFCO, which holds 49 per cent, and Swan Energy which holds a majority stake. The JV was established to set up a floating storage and regasification unit, a special floating vessel equipped with tanks for LNG storage and all the required vaporisation process equipment.
IFFCO petition
Earlier this month, IFFCO moved the NCLT alleging mismanagement and oppression by Triumph Offshore. The petition said that the JV was issuing securities to Swan Energy to pre-pay debt and that would result in a dilution of its stake in the JV which was detrimental to its interest. It stated in its petition that Triumph Offshore had arranged with banks for a loan of over ₹1,600 crore of which State Bank of India had lent ₹400 crore.
The petition said that the JV had not taken any steps to charter any floating storage gasification unit (FRSU).
IFCCO said that Swan Energy had sought to raise over ₹1,400 crore through a preferential issue to a Singapore-based foreign entity, while Triumph Offshore has also sought approval to make a rights issue to Swan Energy to replace its bank loan with promoter loan. The fertiliser company said that this move was opposed by its nominee director. IFFCO said that it had funds of over ₹400 crore and there was no need to raise additional capital.
Responses
In their responses both Swan Energy and Triumph offshore said that all decisions were taken with the knowledge of IFFCO, since its directors were also on the board of the JV. Swan Energy said that there had been a delay in securing a charter for the FRSU due to cyclone, COVID etc and they had eventually secured a charter to a Turkish company for a year.
The decision to raise funds through an inter-corporate loan and a rights issue was taken when the charter was due to expire and to pre-pay outstanding debt. The affidavit said it was “purely an economic decision made out of commercial probity and in the interests of the company.”
Both the respondents have accused IFFCO of being a passive investor in the JV with no direct financial obligations to lenders.
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There has also been a proposal for Swan Energy to buy out IFFCO’s 49 per cent stake in the JV.
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