Tribunal Orders Pro-Rata Debt Distribution in Escrow Accounts Under Revised Framework

The tribunal directed the distribution of the 80% debt due in Escrow Accounts in accordance with the Revised Distribution Framework, ensuring pro-rata distribution among all financial creditors. Financial creditors must refund any excess amounts received based on final resolution. Unresolved disputes between parties are to be resolved through arbitration proceedings, as mandated by the Concession Agreements.

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Issues Involved:
1. Deposit and appropriation of 80% debt due in Escrow Accounts.
2. Compliance with the Concession Agreement and handover of assets.
3. Distribution of deposited amounts as per the Revised Distribution Framework.
4. Arbitration proceedings for unresolved disputes.

Issue-wise Detailed Analysis:

1. Deposit and Appropriation of 80% Debt Due in Escrow Accounts:
The primary issue involved the deposit of 80% of the debt due by HSVP into the Escrow Accounts of RMGL and RMGSL, as mandated by the Supreme Court's judgment dated 26th March 2021. The Union Bank of India and Canara Bank, representing the consortium lenders, sought permission to appropriate the deposited amounts towards their dues. The Supreme Court's judgment emphasized that the deposited amount is to protect the interests of the lenders and should be appropriated by them. The tribunal noted that the Supreme Court had directed that any disputes regarding the audit report should be resolved through arbitration.

2. Compliance with the Concession Agreement and Handover of Assets:
HSVP and HMRTC argued that RMGL and RMGSL had not complied with the terms of the Concession Agreement, particularly the handover of assets, and therefore, were not entitled to claim any amount from the deposited funds. However, the tribunal found that RMGL and RMGSL had handed over the assets and control of the metro rail projects to HMRTC and DMRC as of 22nd October 2019, as evidenced by the letters and documents submitted. The tribunal rejected the argument that RMGL and RMGSL had not complied with the Concession Agreement, noting that the Supreme Court had already addressed these issues and directed that any remaining disputes be resolved through arbitration.

3. Distribution of Deposited Amounts as per the Revised Distribution Framework:
The tribunal emphasized that the distribution of the 80% debt due deposited in the Escrow Accounts must be in accordance with the Revised Distribution Framework approved by the tribunal on 12th March 2020. This framework ensures that the termination amount received from HSVP is utilized to satisfy the debts of all lenders, including both secured and unsecured creditors, as well as operational creditors. The tribunal rejected the lenders' request to appropriate the entire amount solely for their dues, emphasizing the need for a pro-rata distribution among all stakeholders as per the approved framework.

4. Arbitration Proceedings for Unresolved Disputes:
The tribunal reiterated that any disputes regarding the audit report, the validity of termination notices, and other claims between the parties should be resolved through arbitration, as provided in the Concession Agreements. Both RMGL/RMGSL and HSVP/HMRTC had already invoked arbitration clauses and issued notices to each other, indicating that arbitration proceedings were underway. The tribunal emphasized that the interim distribution of the deposited amounts would be subject to the final resolution of these disputes through arbitration and the final resolution process of ILFS companies.

Conclusion:
The tribunal directed that the distribution of the 80% debt due deposited in the Escrow Accounts should be carried out in accordance with the Revised Distribution Framework approved on 12th March 2020. The distribution should be on a pro-rata basis among all financial creditors of the projects, subject to the final resolution of ILFS companies. The tribunal also mandated that financial creditors provide an undertaking to refund any excess amounts received, based on the final resolution. All unresolved disputes between RMGL/RMGSL and HSVP/HMRTC were to be addressed through arbitration proceedings.

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