VEDANTA Resources Holdings Limited has charged that it has the authority to challenge the illegal sale of the surface rights of Konkola Copper Mines as it has the right to return capital on winding up, which capital will be derived from the assets of its company, KCM.
The majority shareholder of KCM contends that it has an interest in the assets of the company in liquidation and any loss would be detrimental to it.
Vedanta asked the Lusaka High Court to dismiss the application by Rephidim Mining and Technical Suppliers Limited, Mimbula Minerals Limited and Moxico Resources Zambia to set aside its writ for irregularity and being incompetently before court, as the application was misconceived and lacked merit.
This is in a matter where KCM and Vedanta Resources Holdings Limited have sued Milingo Lungu in his capacity as provisional liquidator of KCM, Rephidim Mining and Technical Suppliers Limited, Mimbula Minerals Limited and Moxico Resources Zambia in the Lusaka High Court Commercial Registry, seeking an order that Lungu be restrained, whether by himself or his agents, from trespassing on it mining rights areas and selling Lot 694/M to the defendants.
According to an affidavit in opposition to summons for an order to set aside writ or dismiss action for being irregular and incompetently before court, Deepak Kumar, a director of Vedanta, said the directors of KCM commenced the current action in the name of the company in exercise of their residual powers.
Kumar said that following the commencement of the current action by KCM and Vedanta, Lungu purportedly appointed KCM in-house counsel, who was under his control and directed him to discontinue the proceedings against the defendants, on behalf of KCM which was a travesty of justice because Lungu could not appoint counsel to discontinue proceedings against himself.
“In response to the notice of discontinuance, the plaintiffs filed an application to set aside the said notice of discontinuance and the said application is pending hearing before this court. In view of this, the defendants cannot claim that there are no proceedings subsisting against them,” Vedanta said
“Vedanta’s action was not a derivative action, therefore, no leave of court is required to commence this action” Vedanta went in to say.
Kumar said Vedanta’s action was to challenge the decision of Lungu to sign a consent order with Rephidim, Mimbula and Moxico in an illegal manner, to sell surface rights of the company and binding the company to a long-term agreement for the supply of Ore to the said companies, an action that is not only detrimental to the company but also its shareholders, the majority being Vedanta.
Kumar said Vedanta had the right to the assets of the company in liquidation and could commence an action challenging any illegality in the disposal of the company (KCM) assets by Lungu.
He stated that not only did Lungu fail to follow the proper procedure in disposing of surface rights, he also agreed to compensation from Mimbula Minerals Limited, in installments, without any form of security.
Kumar contended that in the event of default by Mimbula Minerals Limited, KCM and its shareholders would suffer loss.
Vedanta has submitted that it has properly sued Lungu for his wrongdoing as provisional liquidator, in its own name and its own right as authorised by law.
“We submit that Vedanta, as majority shareholder, has a right to the assets of the company in liquidation and as such, can commence an action challenging any illegality in the disposal of the company assets by the provisional liquidator,” Vedanta said.
Vedanta argues that although the surface rights on Lot 694/M belonged to KCM, it had the right to protect them by challenging their illegal disposal by Lungu.