Vedanta Resources Holdings Limited has submitted before the Lusaka High Court that as Konkola Copper Mines’ majority shareholder, it 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.
It has further argued that the application by Rephidim Mining and Technical Suppliers Limited, Mimbula Minerals Limited and Moxico Resources Zambia Plc to set aside its writ for irregularity and being incompetent before court, is misconceived, has no merit and should, therefore, be dismissed with costs.
In this matter, KCM board 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 Plc in the Lusaka High Court Commercial Registry seeking, among other claims, an injunction restraining Milingo whether by himself or his agents from taking any action to effect or perfect the sale of Lot 694/M to the other defendants.
On August 27, last year, High Court Judge Annesie Banda-Bobo halted the other matter filed in the Lusaka High Court Principal Registry in which ZCCM-IH has petitioned the Court seeking an order that KCM should be wound up for engaging in tax evasion and being managed in a manner detrimental to its interest.
The matter was halted pending Vedanta’s appeal to the Court of Appeal against the Court’s refusal to refer parties to arbitration.
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 filed January 7, in the Lusaka High Court Commercial Registry, Deepak Kumar, Vedanta’s director and company secretary, stated that the directors of KCM commenced the current action in the name of the company in exercise of their residual powers.
He added that Vedanta commenced the action against the defendants in its capacity as majority shareholder of KCM.
Kumar stated that following the commencement of the current action by KCM and Vedanta, Milingo purportedly appointed KCM In-House Counsel, who was under his control as Provisional Liquidator, and directed him to discontinue the proceedings against the defendants on behalf of KCM.
He submitted that Milingo cannot appoint counsel to discontinue proceedings against himself as this was wrongful at law and was a travesty of justice.
“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 the defendants,” read the affidavit.
Kumar stated that Vedanta’s action was not a derivative action and as such it was not required to seek leave of court to commence this action.
“Vedanta’s action is to challenge the decision of the Provisional Liquidator to sign a Consent Order with the other defendants’ companies in an illegal manner, agreeing 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,” read the affidavit further.
Kumar argued that not only did Milingo not follow the proper procedure in disposing of surface rights, but he also agreed to compensation from Mimbula Minerals Limited, in installments, without any form of security.
He added that in the event of default by Mimbula Minerals Limited, KCM as well as its shareholders would suffer loss.
Kumar further stated that Vedanta had the authority to challenge the illegal sale of the surface rights of KCM because it had a right to return of capital on winding-up, which capital would be derived from the very assets of KCM.
He further stated that the transaction that the defendants had entered into under the Consent Order was on-going and would only be completed over a period of 10 years and a search revealed that no changes had been effected on the register at the Lands and Deeds Registry, as such, the other defendant companies rights under the illegal Consent Order could be curtailed.
And in the plaintiffs’ list of authorities and skeleton arguments, Vedanta submitted that the said Consent Order was executed in a manner that contravenes established court process and procedures and the principles of justice.
It stated that this was so because the defendants signed the Consent Order before a single judge of the Court of Appeal, after a final judgment of the full Court of Appeal, thereby, varying the decision of the full court.
Vedanta further submitted that it had properly sued Milingo for his wrongdoing as Provisional Liquidator, in its own name and its own right as authorized 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,” stated Vedanta.
It further argued that although the surface rights on Lot694/M belonged to KCM, it had the right to protect them by challenging the illegal disposal of them by Milingo.