Tribunal: Receivables Assignment = Ownership Transfer, Not Violation of Interim Order

The Tribunal concluded that the assignment of receivables was a transfer of ownership, not just a security interest. The actions of the Escrow Bank and Lender did not violate the interim order as the assigned receivables were not considered assets of IL&FS. There was no contempt of court found in their actions. The Tribunal directed the reversal of any excess debits from the Escrow Account beyond the principal and interest payable to the Borrower. The request for the Lender to reverse a specific amount was denied, but instructions were given for the reversal of any excess debits.

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Issues Involved:
1. Validity of the assignment of receivables.
2. Compliance with the interim order dated 15.10.2018.
3. Whether the actions of the Escrow Bank and the Lender constituted contempt of court.
4. Reversal of debited amounts from the Escrow Account.

Detailed Analysis:

1. Validity of the Assignment of Receivables:
The Tribunal examined the nature of the transaction documents, including the Facility Agreement, Assignment Agreement, and Escrow Agreement. The Facility Agreement dated 25th June 2018, between the Borrower and Lender, involved a loan of Rs. 400 Crores, secured by assigning receivables from the Borrower's contracts. The Assignment Agreement and Power of Attorney executed on the same date indicated that the receivables were assigned to the Lender for repayment of the loan. The Tribunal concluded that the assignment of receivables was a transfer of ownership and not merely a security interest, as the receivables were the exclusive property of the Lender for repayment purposes.

2. Compliance with the Interim Order Dated 15.10.2018:
The interim order dated 15.10.2018 imposed a moratorium on actions to foreclose, recover, or enforce any security interest over the assets of IL&FS and its group companies. The Tribunal analyzed whether the debiting of the Escrow Account by the Lender violated this order. It was determined that the assigned receivables, being the property of the Lender, did not fall under the assets of IL&FS. Therefore, the Lender's actions did not constitute a violation of the interim order. The Tribunal emphasized that only the residual receivables, which were not assigned, could be considered assets of IL&FS.

3. Whether the Actions of the Escrow Bank and the Lender Constituted Contempt of Court:
The Tribunal considered whether the Escrow Bank and the Lender's actions in debiting the Escrow Account constituted contempt of the interim order. It was concluded that the Escrow Bank merely followed the instructions of the Lender as per the Escrow Agreement and did not act in contempt. The Tribunal also found no willful disobedience by the Lender, as the actions were based on the transaction documents and the interpretation of the agreements. Therefore, there was no occasion for purging the contempt by either the Escrow Bank or the Lender.

4. Reversal of Debited Amounts from the Escrow Account:
The Tribunal directed that if any amount in excess of the principal and interest payable had been debited from the Escrow Account, it should be reversed to the Borrower. The Escrow Bank was instructed to revisit all debits made after 15.10.2018 to determine if any excess amounts had been debited and to reverse such amounts to the Borrower within one month, with due intimation to IL&FS.

Conclusion:
The Tribunal refused the prayer of IL&FS to direct the Lender to reverse the amount of Rs. 112,79,18,348/- but allowed for the reversal of any excess amounts debited beyond the principal and interest payable. All applications were disposed of accordingly, with specific directions to the Escrow Bank to review and reverse any excess debits.

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