The National Company Law Tribunal (NCLT) has directed RattanIndia Finance to appoint Bipin Kabra as its chief financial officer (CFO), over the plea filed by the JV partner LSF 10 Rose Investments.
LSF 10 Rose Investments, is a subsidiary of US-based private equity firm Lone Star Funds (LSF), and holds 50 per cent shareholding in RattanIndia Finance (RF), a non-banking finance company.
Allowing the plea of LSF 10 Rose Investments, the two-member NCLT bench said that as per the articles of association of the JV company RattanIndia Finance, it (LSF) has the right to nominate the CFO of the company.
The Delhi bench of the tribunal also consented to the private equity firm’s submission that its partners do not have the right to contest the ”validity of petitioner’s (LSF 10 Rose) nomination”.
"We, therefore, hold that Bipin Kabra’s nomination as the 3rd candidate is valid and he should be appointed as the CFO of the Company,” said the NCLT bench comprising B V Balram Das and N K Bhola.
As per section 140 of AoA of RattanIndia Finance, LSF has the right to nominate a person as CFO and if the JV partner rejects the appointment of the first nominee, then LSF would nominate the second nominee.
And if the JV partner rejects the appointment of the second nominee, then LSF 10 Rose Investments shall have the right to nominate any person as CFO and the JV partner would support it.
The private equity firm submitted that the JV partner had already rejected the name of the second person Venkataraman Subramanian and thereafter it had proposed Bipin Kabra as the third name.
However, this was also not agreed upon by the JV partner, following which LSF 10 Rose Investments approached NCLT.
The 12-page NCLT order further said "Bipin Kabra shall file an undertaking by way of an affidavit before this tribunal within 2 weeks that he shall abide by fulfilling the requirements mentioned” in the provision of the Companies Act, 2013.
"Respondent No 1 (RattanIndia Finance) shall issue an appropriate order appointing Bipin Kabra as CFO of the Company, after filing of the undertaking before this Tribunal by Bipin Kabra. The terms of appointment shall as already agreed upon between the parties,” said NCLT order dated March 29, 2022.
"Bipin Kabra after being appointed as CFO shall disclose all particulars about his concern or interest in any other Company or Companies etc,” said NCLT.
The Tribunal’s order came over an interim application filed by the investment firm to appoint an independent professional and full-time CFO for RattanIndia Finance in terms of the Articles of Association (AoA) of the company.
LSF 10 Rose Investments has already filed a petition before the NCLT alleging mismanagement and oppression against the minority shareholders under sections 241 and 242 of the Companies Act, 2013.
This matter is presently pending adjudication before the NCLT.
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