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Vedanta asks High Court to quash KCM winding up proceedings, relieve Milingo Lungu of his role

VEDANTA Resources Holdings Limited has charged that sustaining the winding up petition against Konkola Copper Mines (in liquidation) despite the Arbitral Tribunal having declared that ZCCM-IH was and is in continuous breach of the dispute resolution provisions of the Shareholders agreement, creates a serious risk of having conflicting decisions.

The majority shareholder of KCM has since asked the Lusaka High Court to quash the winding up proceedings against its mining firm and relieve Milingo Lungu of his duties as the provisional liquidator.

This is in a matter where ZCCM-IH has petitioned KCM for liquidation, seeking an order that it be wound up for engaging in tax evasion and being managed in a manner detrimental to the interests of government, among other reasons.

The tribunal ruled that KCM (in liquidation) is not supposed to conduct any business and meet its obligations pending the winding up proceedings.

According to a partial final award dated July 7, 2021, the Arbitral Tribunal in South Africa ruled that it has the jurisdiction to determine Vedanta’s claim that ZCCM-IH has breached and is in continuing breach of the dispute resolution provisions at clause 24 and clause 26 of the shareholders agreement.

The tribunal ruled that the petition and amended petition on the grounds relied upon was in breach of the dispute resolution provisions of the shareholders’ agreement.

It further ruled that KCM was not required to carry on business to meet all objectives contained in the preamble to the approved programme and the KCM board was responsible for the management of the company.

And in an affidavit in support of summons for an order to strike out and or dismiss the petition pursuant to section 60(3)(f) of the corporate insolvency Act no.9 of 2017 and Section 13 of the High Court Act, Deepak Kumar, a director and company secretary of the contributor, said on July 26, 2021 Vedanta filed an application for the registration and enforcement of the final award in the commercial division of the High Court under cause number 2021/HPC/ARB/no.432.

He stated that on July 30, 2021, the deputy registrar granted the contributor leave to register the partial arbitral award in Zambia.

Kumar said the partial final arbitral award having been registered in Zambia was binding on the petitioner and had full force and effect of a judgment of the court.

“On August 3, 2021, the contributor filed into court a notice of registration of the Partial Final Arbitral Award in the commercial registry of the High Court,” Kumar said.

“On August 5, 2021, the contributor, through its advocates on record, served the notice of registration of the Partial Final Arbitral Award on the petitioner.”

He stated that following the ruling of the Arbitral tribunal, the grounds relied upon by the petitioner in the petition and the accompanying verifying affidavits before court should be struck out and the petition be dismissed and the provisional liquidator of the respondent company be discharged.

“The partial final arbitral award having been made in Johannesburg South Africa is capable of enforcement and execution in South Africa and has neither been set aside nor suspended in Zambia or Johannesburg South Africa,” Kumar said.

In his skeleton arguments, Kumar stated that the sole Arbitrator had become functus officio with regards to issues that have been addressed in the partial final arbitral award.

“The petitioner cannot either before this court or before the ongoing arbitration proceedings re-open the individual issues of law or fact which have been decided upon by the partial final arbitral award. The award is conclusive on the petitioner’s breach of the arbitration clause in the shareholders agreement and continues to breach the said provision as long as the winding up proceedings on the current grounds are still before court,” Kumar said.

“We urge this court to give effect to the Partial Final Arbitral Award as the proceedings before this court have undoubtedly become inescapably doomed to failure and should be dismissed as being an abuse of the process of the court. It is now settled that the right forum for the petitioner is not before this court but Arbitral tribunal as per provision of the Shareholders Agreement.”

Kumar told the court that the proceedings before her had now become frivolous and vexatious to the extent that the same could be sustained by the court.

“Sustaining the petition creates serious confusion and a risk to have conflicting decisions. We urge the court to dismiss and or strike out the petition as it cannot be seen to aid the petitioner in breaching of the SHA by allowing these proceedings to remain alive,” said Kumar.

“The provisional liquidator cannot continue to act as such following the dismissal of the petition. Section 65(1) of the Insolvency Act empowers this court to provisionally appoint the official receiver or any other person to be the liquidator after the presentation of the winding up petition before making a winding up order. The dismissal of the winding up petition inevitably discharges the provisional liquidator of his duties.”

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