THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 136/2022

In the matter between:
RONICA RAGAVAN                                                           FIRST APPELLANT

RAVINDRA NATH                                                          SECOND APPELLANT

ASHU CHAWLA                                                                 THIRD APPELLANT

and

OPTIMUM COAL TERMINAL (PTY) LTD                 FIRST RESPONDENT
(IN BUSINESS RESCUE)

JUANITO MARTIN DAMONS N O                          SECOND RESPONDENT

KURT ROBERT KNOOP N O                                       THIRD RESPONDENT
(Second and third respondents cited in their capacities as
joint business rescue practitioners of the first respondent)

ALL AFFECTED PARTIES OF
OPTIMUM COAL TERMINAL (PTY) LTD
AS PER ANNEXURE A
TO THE NOTICE OF MOTION                               FOURTH RESPONDENT

TEGETA EXPLORATION AND
RESOURCES (PTY) LTD

(IN BUSINESS RESCUE)                                                FIFTH RESPONDENT

JOHAN LOUIS KLOPPER N O                                     SIXTH RESPONDENT

KURT ROBERT KNOOP N O                                 SEVENTH RESPONDENT
(Sixth and seventh respondents cited in their capacities as
joint business rescue practitioners of the fifth respondent)

ALL AFFECTED PARTIES OF TEGETA
EXPLORATION AND RESOURCES (PTY)
LTD AS PER ANNEXURE B TO THE
NOTICE OF MOTION                                                EIGHTH RESPONDENT

Neutral citation: Ragavan and Others v Optimum Coal Terminal (Pty) Ltd and
Others (136/2022) [2023] ZASCA 34 (31 March 2023)
Coram:
VAN DER MERWE, MOTHLE, MABINDLA-BOQWANA
and MOLEFE JJA and UNTERHALTER AJA
Heard:

13 March 2023
Delivered:
31 March 2023
Summary:
Company law – business rescue supervision under Companies
Act 71 of 2008 – when a company in business rescue is a creditor of another

company in business rescue – the right to vote on the business rescue plan for the
debtor company vests in the business rescue practitioners of the creditor company
and not in its board of directors.

ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Victor J,
sitting as court of first instance): judgment reported sub nom Ragavan and Others v
Optimum Coal Terminal (Pty) Ltd and Others [2022] ZAGPJHC 22; 2022 (3) SA
512 (GJ).
The appeal is dismissed with costs, including the cost of two counsel, in respect of
the first, second, third, fifth, sixth and seventh respondents as well as Liberty Energy
(Pty) Ltd.

JUDGMENT
Mabindla-Boqwana JA (Van der Merwe, Mothle and Molefe JJA and
Unterhalter AJA concurring):
Introduction
[1] The crisp legal question in this appeal has been formulated by the parties as
follows:
‘When a company in business rescue (Company A) is a creditor of another company in business
rescue (Company B), and Company B is a wholly-owned subsidiary of Company A, [does] the
right to cast a vote on any matter contemplated under [ss] 151 and 152 of the Companies Act [71
of] 2008, [vest] in Company A’s business rescue practitioners or its board of directors?’ (My
emphasis.)

[2] In this case, Company A is the fifth respondent, Tegeta Exploration and
Resources (Pty) Ltd (in business rescue) (Tegeta) and Company B is the first
respondent, Optimum Coal Terminal (Pty) Ltd (in business rescue) (OCT). The sixth
and seventh respondents, Mr Johan Louis Klopper NO and Mr Kurt Robert Knoop
NO are Tegeta’s business rescue practitioners (the Tegeta practitioners) and the
second and third respondents are Mr Juanito Martin Damons NO and Mr Kurt Robert
Knoop NO, cited in their capacities as OCT’s business rescue practitioners (the OCT
practitioners).

[3] In February 2018, OCT and Tegeta were placed under voluntary business
rescue. Shortly thereafter, the OCT and Tegeta practitioners were appointed. In
October 2021, the OCT practitioners published a business rescue plan (the plan) and
notified OCT’s affected persons, which included Tegeta as a creditor of OCT, that a
meeting to vote on the proposed business rescue plan for OCT would be held on
10 November 2021.

[4] The appellants, as Tegeta’s directors contended that they had the right to vote
on the plan, while the Tegeta practitioners argued that the right was theirs. The
matter served before the Gauteng Division of the High Court, Johannesburg (the
high court), which interdicted the holding of the meeting, pending the determination
of the right to vote.

[5] The high court answered the legal question in favour of the respondents,
holding that the right to vote lay with the Tegeta practitioners who were given full
management control under Chapter 6 of the Companies Act 71 of 2008 (the Act).
The appellants appeal against this decision with the leave of the high court. All

parties affected by the business rescue process in OCT were cited as the fourth
respondent in the high court. Liberty Energy (Pty) Ltd (Liberty) was the only
affected party to file an answering affidavit on account of it being a creditor of OCT.
It also participates in this appeal as the fourth respondent.

[6] Section 140(1) in Chapter 6 of the Act provides that:
‘During a company’s business rescue proceedings, the practitioner, in addition to any other powers
and duties set out in this Chapter –
(a) has full management control of the company in substitution for its board and pre-existing
management;
(b) may delegate any power or function of the practitioner to a person who was part of the board
or pre-existing management of the company;
(c) may –
(i)
remove from office any person who forms part of the pre-existing management of
the company; or
(ii)
appoint a person as part of the management of a company, whether to fill a vacancy
or not, subject to subsection (2); and
(d) is responsible to –
(i)
develop a business rescue plan to be considered by affected persons, in accordance
with Part D of this Chapter; and
(ii)
implement any business rescue plan that has been adopted in accordance with Part
D of this Chapter.’ (My emphasis.)

[7] The appellants referred to s 66(1) of the Act, which provides that:
‘The business and affairs of a company must be managed by or under the direction of its board,
which has the authority to exercise all of the powers and perform any of the functions of the
company, except to the extent that this Act or the company’s Memorandum of Incorporation
provides otherwise.’

[8] Their reliance on this section is to emphasise that under the Act it is the board
of directors (the board) that enjoys the plenary powers of the company. They contend
that the business rescue process in Chapter 6 of the Act, posits what they styled as a
‘hybrid cohabitation model’,1 in which the board continues to play a decisive role in
the affairs of the company, together with the practitioner, after it has been placed
under supervision and in business rescue.

[9] The appellants base this cohabitation model mainly on s137 read with s 142
of the Act. Section 137(2)(a) and (b) require each director of the company, during
the company’s business rescue, to continue with the exercise of their functions but
subject to the ‘authority of the practitioner’. They have a duty to the company to
exercise any management function within the company in accordance with the
express instruction or direction of the practitioner. Section 142 deals with the duty
of the directors to co-operate and assist the practitioners.

[10] In developing their submissions, the appellants accentuate the difference
between ‘management’ and ‘governance’. Insofar as governance is concerned, the
contention is that the directors retain the powers in relation to the strategic
positioning of the company. As for management, which, they argue, is confined to
the day-to-day running of the business of the company, they accept that the
practitioners’ powers trump those of the directors.

[11] Further to advance this argument, the appellants rely on this Court’s decision
of Tayob and Another v Shiva Uranium (Pty) Ltd and Others (Shiva), where it was
held:

1 The appellants distinguished it from the models in Chapter 11 of the US Bankruptcy Code of 1978 and Part 5.3A of
Australia’s Corporations Act 50 of 2001.

‘Unless indicated otherwise, “company” must bear its ordinary meaning and the same meaning as
in s 129, that is, the company represented by its board. There are no indications to the contrary.’2

[12] The appellants further contend that the powers of the practitioners vis-à-vis
the board, must be viewed in two phases, that is, before and after the adoption of the
plan. According to the appellants, Tegeta is in the first phase because a plan has yet
to be adopted. During this phase, so it was argued, business rescue is in limbo and
the practitioners must yield to the directors’ strategic positioning of the company. In
other words, cohabitation is the model that applies before the adoption of the plan.
Furthermore, the structural relationship between Tegeta and OCT as well as the fact
that one of the practitioners is in both companies, are relevant in the context of this
case. The position is however, different post plan, as by then the decision-making
powers would be set out in the plan.

[13] The appellant’s contentions as to the powers of the board during the process
of business rescue must be determined by reference to the proper interpretation of
the relevant provisions of the Act. Interpretation of a statute ‘is an objective unitary
process where consideration must be given to the language used in the light of the
ordinary rules of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed and the material known to those
responsible for its production . . . The inevitable point of departure is the language
used in the provision under consideration’.3 The approach cannot change depending
on the facts of the case.

2 Tayob and Another v Shiva Uranium (Pty) Ltd and Others [2020] ZASCA 162 para 20.
3 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16
para 8.

[14] Whilst s 66(1) of the Act confers original powers on the board to manage the
business affairs of the company and to exercise all the company’s powers and
perform its functions, it operates ‘except to the extent that [the] Act . . . provides
otherwise’. Chapter 6 is one such exception. It installs the practitioner as the
authority with full management powers and duties, in charge of the company and
mandated to run it for the duration of the business rescue. Counsel for the appellants
conceded that the question of who had the right to vote boils down to whether that
power fell within the purview of the ‘full management control’ of the practitioners
as contemplated in s 140(1)(a).

[15] As was observed in Shiva, the word ‘management’ is not defined in the Act
and therefore it must bear its ordinary meaning.4 The word ‘manage’ means ‘to be
in charge of or to run the company particularly on a day-to-day basis.’5

[16] The ordinary meaning of the wide expression ‘full management control’ itself
signifies control of the property of the company. Intrinsic to the power to run the
company is management of the company’s resources or property, including its
assets. The debtors’ book forms part of the assets of the company. As a creditor, the
vote on the plan of a debtor simply entails a decision over the company’s property.

[17] This is reinforced by the context of the Act as illustrated by numerous
provisions, which are supportive of the reading that, ‘full management control’,
entails the practitioner’s exercise of control over the property of the company. The
definition of ‘business rescue’ in s 128(1)(b) of the Act underscores in express terms

4 Shiva fn 2 above para 24.
5 Ibid. See also Prinsloo v S [2015] ZASCA 207; [2016] 1 All SA 390 (SCA); 2016 (2) SACR 25 (SCA) para 46.

the shift of management and control of the company’s affairs, business and property
from the directors to the practitioner. It stipulates the following:
‘“business rescue” means proceedings to facilitate the rehabilitation of a company that is
financially distressed by providing for –
(i) the temporary supervision of the company, and of the management of its affairs, business and
property;
(ii) a temporary moratorium on the rights of claimants against the company or in respect of
property in its possession; and
(iii) the development and implementation, if approved, of a plan to rescue the company by
restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that
maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not
possible for the company to so continue in existence, results in a better return for the company’s
creditors, or shareholders than would result from the immediate liquidation of the company.’ (My
emphasis.)

[18] As can be seen, s 128(1)(b)(i) refers to two categories of power, ie ‘temporary
supervision of the company’ and ‘management of its affairs, business and property’.
The facilitation of the rehabilitation of a company expressly includes management
of property. Everything that has to do with the company’s debtors clearly falls within
the category of management. A practitioner is defined in the Act as a person
appointed ‘to oversee a company during business rescue’.6

[19] Section 133(1)(a) stipulates that ‘[d]uring business rescue proceedings, no
legal proceedings, including enforcement action, against the company, or in relation
to any property belonging to the company, or lawfully in its possession, may be
commenced and proceeded with in any forum, except – (a) with the written consent

6 Section 128(1)(d).

of the practitioner’. (My emphasis.) This reflects the practitioner’s control in relation
to the claims by third parties to the property of the company.

[20] In terms of s 134(1)(a) during a company’s business rescue proceedings, ‘the
company may dispose, or agree to dispose, of property only – (i) in the ordinary
cause of its business.’ Section 134(1)(b) provides further that ‘any person who, as a
result of an agreement made in the ordinary course of the company’s business before
the business rescue proceedings began, is in lawful possession of any property
owned by the company may continue to exercise any right in respect of the property
as contemplated in that agreement. . .’ and in terms of s 134(1)(c) ‘. . . no person
may exercise any right in respect of any property in the lawful possession of the
company, irrespective of whether the property is owned by the company, except to
the extent that the practitioner consents in writing’. (My emphasis.)

[21] The practitioner also has powers to investigate the company’s affairs,
business, property and financial situation and after having done so, consider whether
there is any reasonable prospect of the company being rescued, soon after his or her
appointment (s 141(1)).

[22] With the full suite of powers over the company’s property outlined above, it
is difficult to see how the practitioner cannot also have the power to vote on the plan
of a debtor company and thereby determine the extent to which a particular debt
would be recovered under that plan or not. It is instructive that at the meeting to
consider the plan, the creditor votes on the plan which, among other details, contains

the proposal about the property of the debtor company that is available to pay
creditors’ claims.7

[23] The primary purpose of business rescue is to enable the practitioner to prepare
and implement a plan ‘to rescue the company by restructuring its affairs, business,
property, debt and other liabilities, and equity in a manner that maximises the
likelihood of the company continuing in existence on a solvent basis or, if it is not
possible for the company to so continue in existence, results in a better return for the
company’s creditors, or shareholders than would result from the immediate
liquidation of the company.’8

[24] Whether debts can be recovered and what the assets of the company are, form
a crucial part of the process of preparing a plan. The plan must contain information,
which includes the property available for distribution to the company’s creditors and
a three year projected balance sheet.9 In developing a plan, it would make no sense
to exclude the power to vote on the plan of a debtor. If that were to be the case, the
practitioner would be unable to meet the requirements of s 141(2)(a) and (b), in
terms of which he or she has to undertake a proper investigation of the affairs of the
company, ie if it is in financial distress and whether there is a reasonable prospect of
rescuing it. If it is not in financial distress, to take steps to terminate the business
rescue proceedings.

[25] The inability to vote on a debtor company’s plan would affect the
practitioner’s assessment of the company’s prospects of rescue and/or the state of its

7 Section 150(2)(iv).
8 Section 128(1)(b)(iii).
9 Section 150(2)(c)(iv).

financial distress. That would undermine the very purpose of Chapter 6. Thus, the
words ‘full management control’ found in s 140(1)(a) must be interpreted as
including the power to vote for or against a plan for a debtor company. To give this
power to the directors would be subversive of the purpose of the ‘full management
control’ conferred to the practitioner by the Act.

[26] Therefore, whether or not the board retains any power on strategic matters of
the company during business rescue is a matter we do not need to determine because,
as I have explained, the practitioner enjoys the power to vote as a creditor on the
debtor’s plan.

[27] It must follow, therefore, that the appellants’ reliance on Shiva is misplaced.
In that matter, the Court had to address a narrow issue of who of the board or an
affected person represented ‘the company’ in appointing a new practitioner in terms
of s 139(3) of the Act, in situations where a practitioner dies, resigns, or is removed
from office. The Court held that the appointment of a practitioner did not fall within
the ‘full management powers’ or authority of a practitioner. In that case, the power
of the board was found in s 139(3) and was not expressly qualified. In other words,
that function fell outside the ambit of the authority of a practitioner and could not be
subject to the approval of a practitioner as contemplated in s 137(2)(a) of the Act.
Shiva, thus, dealt with a completely different issue.

[28] It follows that the purported differentiation by the appellants in respect of pre-
and post-adoption of the plan has no foundation in the provisions of chapter 6. This
case is concerned with the creditors’ right to vote as contemplated in s 151 read with
s 152. The shareholders do not feature. Section 152(3)(c) deals with shareholders’

rights. In terms of that section, if the proposed plan alters the rights of any class or
classes of the holders of the company’s securities, the holders of such rights will be
present at the meeting where the plan is being considered. Thus, in that special case,
the shareholders are consulted.

[29] For those reasons, the appeal must fail and costs must follow the result. Such
costs must include those of the affected creditor, Liberty, which together with the
relevant respondents opposed the appeal.

[30] In the result, the following order is made:
The appeal is dismissed with costs, including the cost of two counsel, in respect of
the first, second, third, fifth, sixth and seventh respondents as well as Liberty Energy
(Pty) Ltd.

____________________________
N P MABINDLA-BOQWANA

JUDGE OF APPEAL

Appearances

For appellants:

P F Louw SC and L van Gass
Instructed by:

Van der Merwe & Van der Merwe

Attorneys, George

Honey Attorneys, Bloemfontein

For first to third and
fifth to seventh respondents:   G D Wickins SC and L V R van Tonder
Instructed by:
Smit Sewgoolam Inc, Johannesburg

McIntyre Van der Post Inc, Bloemfontein

For Liberty Energy (Pty) Ltd: P Stais SC and J Brewer
Instructed by:

Andersen Attorneys, Johannesburg

Webbers Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
31 March 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form
part of the judgments of the Supreme Court of Appeal
Ragavan and Others v Optimum Coal Terminal (Pty) Ltd and Others (136/2022) [2023] ZASCA 34
(31 March 2023)
Today, the Supreme Court of Appeal (SCA) dismissed with costs, including the cost of two counsel, an
appeal against the decision of the Gauteng Division of the High Court, Johannesburg (the high court).
The issue before the SCA was whether the creditor’s right to cast a vote on a debtor company’s business
rescue plan (the plan) as contemplated in s151 read with s152 of the Companies Act 71 of 2008 (the
Act) vests in the business rescue practitioner (the practitioner) or the company’s board of directors (the
board).

The fifth respondent, Tegeta Exploration and Resources (Pty) Ltd (in business rescue) (Tegeta) is the
creditor of the first respondent, Optimum Coal Terminal (Pty) Ltd (OCT), also in business rescue. The
sixth and seventh respondents, Mr Johan Louis Klopper NO and Mr Kurt Robert Knoop NO are
Tegeta’s business rescue practitioners (the Tegeta practitioners) and the second and third respondents
are Mr Juanito Martin Damons NO and Mr Kurt Robert Knoop NO, OCT’s business rescue practitioners
(the OCT practitioners).

In February 2018, OCT and Tegeta were placed under voluntary business rescue. Shortly thereafter, the
OCT and Tegeta practitioners were appointed. In October 2021, the OCT practitioners published a
business rescue plan and notified OCT’s affected persons, which included Tegeta as a creditor of OCT,
that a meeting to vote on the proposed business rescue plan for OCT would be held on 10 November
2021. The appellants, Tegeta’s directors, contended that they had the right to vote on the plan, while
the Tegeta practitioners argued that the right was theirs. The matter served before the high court, which
interdicted the holding of the meeting, pending the determination of the right to vote. The high court
answered the legal question in favour of the respondents, holding that the right to vote lay with the
Tegeta practitioners who were given full management control under Chapter 6 of the Act.

Section 140(1) in Chapter 6 of the Act provides that: ‘During a company’s business rescue proceedings,
the practitioner, in addition to any other powers and duties set out in this Chapter – (a) has full
management control of the company in substitution for its board and pre-existing management’. The
appellants referred to s 66(1) of the Act, which provides that: ‘The business and affairs of a company
must be managed by or under the direction of its board, which has the authority to exercise all of the
powers and perform any of the functions of the company, except to the extent that this Act or the
company’s Memorandum of Incorporation provides otherwise’.

Their reliance on this section was to emphasise that under the Act it is the board that enjoys the plenary
powers of the company. They contended that the business rescue process in Chapter 6 of the Act, posited
what they styled as a ‘hybrid cohabitation model’, in which the board continues to play a decisive role
in the affairs of the company, together with the practitioner, after it has been placed under supervision
and in business rescue.

The appellants’ contentions as to the powers of the board during the process of business rescue must be
determined by reference to the proper interpretation of the relevant provisions of the Act. The approach
cannot change depending on the facts of the case.

Whilst s 66(1) of the Act confers original powers on the board to manage the business affairs of the
company and to exercise all the company’s powers and perform its functions, it operates ‘except to the
extent that [the] Act . . . provides otherwise’. Chapter 6 is one such exception. It installs the practitioner
as the authority with full management powers and duties, in charge of the company and mandated to
run it for the duration of the business rescue. Counsel for the appellants conceded that the question of
who had the right to vote boils down to whether that power fell within the purview of the ‘full
management control’ of the practitioners as contemplated in s 140(1)(a).

The SCA held that the ordinary meaning of the wide expression ‘full management control’ itself
signifies the control of the property of the company. Intrinsic to the power to run the company is
management of the company’s resources or property, including its assets. The debtors’ book forms part
of the assets of the company. As a creditor, the vote on the plan of a debtor simply entails a decision
over the company’s property.

This is reinforced by the context of the Act as illustrated by numerous provisions, which are supportive
of the reading that ‘full management control’, entails the practitioner’s exercise of control over the
property of the company. The definition of ‘business rescue’ in s 128(1)(b) of the Act underscores in
express terms the shift of management and control of the company’s affairs, business and property from
the directors to the practitioner. Section 128(1)(b)(i) refers to two categories of power, ie ‘temporary
supervision of the company’ and ‘management of its affairs, business and property’. In terms of s
133(1)(a), the practitioner has control in relation to the claims by third parties to the property of the
company. In terms of s 134(1)(a), during a company’s business rescue proceedings, ‘the company may
dispose, or agree to dispose, of property only in the ordinary course of its business. The practitioner
also has powers to investigate the company’s affairs, business, property and financial situation in terms
of s 141(1).

In considering the full suite of powers over the company’s property outlined above, the SCA found it
difficult to see how the practitioner cannot also have the power to vote on the plan of a debtor company
and thereby determine the extent to which a particular debt would be recovered under that plan or not.

The primary purpose of business rescue is to enable the practitioner to prepare and implement a plan
‘to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and
equity in a manner that maximises the likelihood of the company continuing in existence on a solvent
basis or, if it is not possible for the company to so continue in existence, results in a better return for the
company’s creditors, or shareholders than would result from the immediate liquidation of the company’.
In developing a plan, it would make no sense to exclude the power to vote on the plan of a debtor. If
that were to be the case, the practitioner would be unable to meet the requirements of s 141(2)(a) and
(b), in terms of which he or she has to undertake a proper investigation of the affairs of the company,
ie if it is in financial distress and whether there is a reasonable prospect of rescuing it. If it is not in
financial distress, to take steps to terminate the business rescue proceedings.

The SCA held that the inability to vote on a debtor company’s plan would affect the practitioner’s
assessment of the company’s prospects of rescue and/or the state of its financial distress. That would
undermine the very purpose of Chapter 6. The SCA consequently held that the words ‘full management
control’ found in s 140(1)(a) must be interpreted as including the power to vote for or against a plan for
a debtor company. The SCA further held that to give this power to the directors would be subversive of
the purpose of the ‘full management control’ conferred to the practitioner by the Act.

~~~~ends~~~~