VEDANTA Resources Holding Limited is now seeking to challenge the Lusaka High Court on whether the provisional liquidator of its company, KCM, can be confirmed and whether the company can be wound up without Vedanta being heard through appointed lawyers.
The majority shareholder of KCM wants the court to determine whether the provisional liquidator of Konkola Copper Mines Milingo Lungu can appoint a legal practitioner to support or oppose his appointment or the winding up order.
This is in a matter where Zambia Consolidated Copper Mines (ZCCM-IH PLC) wants KCM to be wound up by the Lusaka High Court under the provisions of section 57(g) of the corporate insolvency Act as it is being managed in the manner that is detrimental to the interests of government.
Vedanta had applied to join the proceedings of winding up its company as the second intended respondent because it is the majority shareholder in the mining company holding 79.4 per cent shares, but it was opposed to join the matter by the provisional liquidator of KCM.
In a notice of motion to raise a preliminary issue pursuant to order 14A of the Supreme Court, Vedanta seeks to raise preliminary issue on a point of law on whether Messrs Ellis and Company, Messrs Makebi Zulu Advocates, Messrs Andrew Musukwa and Co and Messrs DH Kemp and Co who are appointed by the provisional liquidator can appear on behalf of the respondent (KCM) to support or oppose the appointment of the provisional liquidator and the winding up of the petition generally.
Vedanta is seeking a determination on whether a confirmation of the provisional liquidator and the compulsory liquidation generally can be conducted without the respondent and or its directors being heard through lawyers of their choice.
According to an affidavit in support of motion to raise preliminary issue, Srinivasan Venkatakrishnan of London in the United Kingdom says the respondent predominantly mines Copper at its Nchanga Open pit mine and operates a copper smelter at Chingola on the Copperbelt province.
Venkatakrishnan, a Director of KCM and Director and Chief Executive Officer Vedanta Resources limited the parent company of Vedanta Resources Holding Limited said VRHL is the majority shareholder in the respondent holding 79.4 per cent of the issued ordinary shares and that certain of the arrangements between ( inter-alia) the petitioner, VRHL, VRL, Government of Zambia and the respondent in relation to the mining company are governed by a shareholders agreement dated November 5, 2004 which sets out detailed provisions for, amongst other things, the manner in which KCM should be managed.
The CEO contended that the power of the provisional liquidator is specific to things the liquidator is empowered to do but is unable to do personally.
“I am advised by counsel and verily believe the same to be true that at law, a provisional liquidator cannot appoint a legal practitioner to support or oppose his own appointment or the making of a winding-up order in respect of a company such as the respondent, notwithstanding that a provisional liquidator has been granted powers of the kind,” reads the court document.
The CEO averred the fact that the advocates appointed by the provisional liquidator have not filed an affidavit in support of or in opposition to the application to appoint a provisional liquidator.
In an Affidavit in opposition to summons for an order for joinder of a party to the proceedings, the mining company’s lawyer Bonaventure Mutale, a lead counsel retained by the provisional liquidator on behalf of KCM, said the order sought by Vedanta is not provided for in the companies winding up rules.
He said in a petition to wind up a company there is no provision for joinder of a party at any stage of the proceedings as a person who wishes to be heard either to support or oppose the petition is only required to file the prescribed notice into court.
“On the basis of the forgoing that the order sought by the intended second respondent is not provided for by the companies (winding up) rules of 2004 and that there is no lacuna there in relation to the hearing of the interested persons. We accordingly pray that the application be dismissed with costs,” said Mutale.
However, Vedanta’s representative Hermein Uys argued that Vedanta’s application to join the winding up proceedings was properly before court.
“The intended second respondent will be prevented from making the submissions on the appointment of provisional liquidator and, or making other applications such as whether any claim by the petitioner should be by way of arbitration pursuant to the shareholders agreement in the matter as it will only be entitled to appear at the hearing to support or oppose the petition to make the winding up order final as opposed to being in a position to intervene and protect its right as majority shareholder in essentially a shareholder dispute in circumstances where the petitioner has flouted the agreed dispute resolution process which Vedanta requires the petitioner to follow,” Uys said.
Vedanta said KCM had not disputed the reasons advanced by the second intended respondent in support of its application to be joined to the proceedings.
“The respondent has failed to demonstrate the basis on which the second intended respondent should not be joined to these proceedings,” Vedanta said.
When the matter came up for hearing before High Court judge Annessie Banda-Bobo on June 4, the respondent raised a preliminary issue on whether Vedanta was right to file documents without leave of the court.
And ZCCM-IH accused Vedanta of raising new issues of arbitration that it did not raise in its application for joinder.
Vedanta now wants to settle the dispute over the provisional liquidation of its company with the Zambian government at The Hague during arbitration.
The matter comes up on June 11.