TaxTMI 
TaxTMI 
2020 (3) TMI 1398
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.... Tikmani, Advocates for Army Group Insurance Fund (AGIF). a Mr. Gopal Jain, Sr. Advocate with Mr. Amar Gupta, Mr. Divyam Agarwal and Ms. Pallavi Kumar, Advocates for SRS Orion Investments Ltd. Mr. Arun Kathpalia, Sr. Advocate with Sidharth Sethi and Mr. Avinash Das, Advocates for PIC India Financial Services Ltd. Mr. Ramji Srinivasan, Sr. Advocate with Mr. L. Viswanathan, Ms. Gauri Rasgotra, Mr. Abhijeet Das, Mr. Raunak Dhillon, Mr. Vikash Kumar Jha, Mr. Karan Khanna, Ms. Ishneet Kaur, Ms. Ritu Viswakarma, Advocates for IL & FS for R-1. Mr. Ramji Srinivasan, Senior Advocate with Mr. Sanjay Shorey, Director (Legal), MCA and Mr. Rakesh Tiwari for Union of India (Appellants) and R-1 in CA (AT) No. 347 of 2018. Dr. Abhishek Manu Singhavi, Sr. Advocate with Mr. Diwakar Maheshwari, Mr. Avishkar Singhavi, Ms. Aditi Bagri, Mr. A. Ramaiah and Mr. Shreyas Edupuganti, Advocates for Induslnd Bank (Respondent No. 16). Mr. Dushyant D. Sr. Advocate with Mr. Diwakar Maheshwari, Ms. Aditi Bagri, Mr. A. Ramaiah and Mr. Shreyas Edupuganti, Advocates for Bajaj Finance Ltd. (Intervenor). Mr. Sandeep Sethi, Sr. Advocate with Mr. Sanjay Kapur, Ms. Megha Karnwal and Mr. V.N.Kannan, Ad....
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....chha, Advocates for Andhra Bank (Dy. No. 9722, 9723 and 9727). Mr. Abhishek Gupta and Mr. Raushal Kumar, Advocates for NALCO Employees Provident Fund Trust and OPGC EPF Trust. Mr. Munindra Dvivedi, and Mr. Abhishek Chauhan, Advocates for NHAI. Mr. Gaurav Chaudhary and Mr. Gurpreet Mora, Advocates. Mr. Debarshi Bhuyan, Advocate for Godrej Consumer Products Ltd. Provident Fund (Intervenor). Mr. Amit Tyagi, Advocate for TLG India Pvt. Ltd., Sapient Consulting EPF Trust. Ms. Madhu Shweta and Ms. Shivangi Khanna, Advocates for NHAI. Mr. Pawan Kumar Bansal, Advocate for Applicants. Mr. Manik Dogra and Mr. Balkishan Ladhania, Advocates for Shapoorji Pallonji & Company Ltd. Group Employees PF (Intervenors). Ms. Anushree Kapadia, Advocate. Mr. Anand Sharkar Jha and Mr. Arpit Gupta, Advocates for ICICI Bank Ltd. Mr. Anand Shankar Jha and Mr. Arpit Gupta, Advocates for Mahindra and Mahindra Ltd., Mahindra and Mahindra Staff Provident Fund, Dewan Housing and Finance Limited and MCC India Employees Provident Fund Trust. Mr. Abhijeet Sinha, Ms. Arushi Mishra and Mr. Shambo Nandy, Advocates for SREI Infrastructures Finance Ltd. Ms. Aditi Sharma, Advocate for In....
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....d. Mr. Nishant Menon, Ms. Kavita Sarin and Mr. Shafiq Ahmed, Advocates for ECIPL Provident Fund. Mr. Ashish Rana and Mr. Harshit Gara, Advocates for Exim. Bank. Mr. Ravi K. Chandra and Mr. Mudit Rohella, Advocates for Oriental Structural Pvt. Ltd. Mr. Raju S. Roy, Mr. Avrojyoti Chatterjee, Mr. Udyan Agarwal and Ms. Jayasree Saha, Advocates for Canara Bank and UCO Bank (Intervenor). Mr. Pulkit Deora and Mr. Utsav Vasudeva, Advocates for CEC Construction Ltd. Mr. Arjun Harkauli, Mr. Prateek Garg, Ms. Aarjoo Wahrona and Mr. Anshuman Gargesh, Advocates for C.G. Power and Industrial Ltd. (Intervenor). Mr. Karan Mehra, Ms. Simran Mehrotra and Mr. Anant Narain Mehrotra, Advocates for SAS Employees Provident Fund. Mr. Maynk Sappa and Mr. N. Saanak Iyer, Advocates for AKG Shuticrings Pvt. Ltd. JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. The Central Government having an opinion that affairs of 'Infrastructure Leasing and Financial Services Limited' ("IL&FS") and its Group Companies are conducted in a manner prejudicial to the public interest, it applied before the National Company Law Tribunal ("Tribunal" for short), Mumbai Bench, Mumbai for issuance of appropriate....
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....rom the impugned order dated 12th October, 2018 in MA 1173/2018 in C.P. No. 3638(MB)/2018, we find that the National Company Law Tribunal ('Tribunal' for short) while accepted that no petition under any of the provision of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) can be preferred by any party for initiation of 'Corporate Insolvency Resolution Process' against 'Infrastructure Leasing and Financial Services Limited' ('IL&FS' for short) and its 348 Group Companies till the Central Government issue appropriate notification with regard to one or other making the provisions applicable to them, refused to pass the interim order in view of prayer of 'Moratorium' made by the Appellant- 'Union of India'. Otherwise the Tribunal has appreciated the difficulties which are being faced by the 'IL&FS' and its 348 Group Companies. 3. The questions arise for consideration in these appeals are: (i) Whether the Tribunal can pass appropriate order under Section 241 read with Section 242 of the Companies Act, 2013 for resolution of the problems faced by the Company in a time-bound manner for maximisation of value of assets of the Company, to promote entrepreneurs....
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.... Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (iii) The acceleration, premature withdrawal or other withdrawal, invocation of any term loan, corporate loan, bridge loan, commercial paper, debentures, fixed deposits, guarantees, letter of support, commitment or comfort and other financial facilities or obligations vailed by 'IL&FS' and its 348 group companies whether in respect of the principal or interest or hedge liability or any other amount contained therein. (iv) Suspension of temporarily the acceleration of any term loan, corporate loan, bridge loan, commercial paper, debentures, fixed deposits and any other financial facility by the 'IL&FS' and its 348 group companies by any party or person or Bank or Company, etc. as of the date of first default. v) Any and all banks, financial institutions from exercising the right to set off or lien against any amounts lying with any creditor against any dues whether principal or interest or otherwise against the balance lying in any bank accounts and deposits, whether current or savings or otherwise of the 'IL&FS' and its 348 group companies. The interim order will ....
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....Trust 12% 4 Abu Dhabi Investment Authority 12.56% 5 Housing Development Finance Corporation Limited 9.02% 6 Central Bank of India 7.67% 7 State Bank of India 6.42% 8 UTI- Unit Linked Insurance Plan - UTI Asset Management Company Limited 0.82% 9 India Discovery Fund 0.86% 10 Others 1.17% TOTAL 100% In addition to the above, the total subscribed and paid up capital of the 1st Respondent, presently is Rs. 983 Crores. 8.2. Although the equity shares of the IL&FS are not listed on any stock exchange, the secured non-convertible debentures as well as the nonconvertible redeemable cumulative preference shares of the IL&FS are listed on the Bombay Stock Exchange. There are six major group companies of the 1st Respondent which contribute over 60% to the consolidated assets of the 'IL&FS Group'. A brief of the four major group companies is provided hereunder:- a) IL&FS Transportation Networks Limited (ITNL) ITNL, incorporated in the year 2000, has business activities ranging from developer, sponsor, construction manager and operator of surface transportation infrastructure, ....
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....grow and become severe in the coming months. It has been admitted by the IL&FS in its company application no. 1044 of 2018: (i) ITNL has been, in default on its debt obligations since June 30, 2018. (ii) The IL&FS itself has been in default on its debt obligations since August 25, 2018. (iii) IFIN, the key subsidiary of the IL&FS engaged in financial services, has been in default since September 12, 2018. This has led to the resignation of the Managing Director & CEO and four independent directors of IFIN on September 21, 2018. (iv) IEDCL, the IL&FS's power generation subsidiary, has defaulted on its payment obligations since August 22 2018. 8.4 Furthermore, the IL&FS has admitted that total debt across the IL&FS Group is approximately Rs. 91,000 crore as on March 31, 2018 and the IL&FS is contemplating monetizing of significant assets of the group companies for servicing the debts besides seeking further financial assistance from the institutional shareholders by way of a proposed rights issue. It is further submitted that the consolidated debt of the company increased to Rs. 91,091.3 crore in 2018 from Rs. 48,671.3 crore in 2014. Interest ou....
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....the concerned company, which has jeopardized the financial health apart from causing serious damage and financial loss to various stakeholders. 8.8 That the facts detailed above by the Central Government clearly spell out the widespread mismanagement of funds by the current management of the IL&FS, in not only the holding company but throughout the IL&FS Group, leading to such a severe crisis that the group is reeling to meet even its day to day operational expenditures. The unscrupulous manner in which public money has been mismanaged and stuck in projects indicate that management of IL&FS has not only failed to manage but were involved in operation cover up till the end and wilfully created financial mess of IL&FS is astonishing. It has been admitted by the IL&FS in its company application no. 1044 of 2018 that there is severe liquidity crunch in the company with no immediate source of funding, so much so that the IL&FS is in no position to service its debt in the 'short term'. IL&FS is left with no assets to raise funds, no credibility to bank, no takers to buy its promises and nothing to offer to the stakeholders in particular and public at large in general to assure its con....
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....ctation of further redemptions from MFs. The added pressure is half yearly, seasonal redemptions MFs face anyway at this time of year. Hence Corporate Bond market is currently very illiquid and not seeing much volumes. 8.11 Further, the importance of the IL&FS and its group from financial stability perspective as highlighted by the Department of Economic Affairs are as under: On consolidated basis, the borrowing of IL&FS from banks and financial institutions (debentures, loans, cash credit and commercial paper) comes to about Rs. 63,000 crores as per the balance sheet of 2017-18. If the exposure of banks to the IL&FS Group is assumed to be about Rs. 53,000 crores, then considering that the exposure of the entire banking sector to all the NBFCs is about Rs. 3.3 lakh crores, IL&FS Group is not inconsequential, but, critical to the financial stability as its share in the total exposure of the banks to the NBFC sector is about 16%. Therefore, there is a substantial public interest in ensuring financial solvency and good governance and management of this Group. The cascading impact of the default by the IL&FS Group on the financial sector would be quite substantial ....
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....quire confidence of the money and debt markets and the banks in the credibility of, the Group. The defaults as on 29th September, 2018 are about Rs. 3761 cores. The confidence of the financial market needs to be restored, and the present management has lost all credibility to service any further financing to the company and it is mentioned above that the existing debt of about Rs. 16468 crores needs to be serviced. The replacement of the existing management by the new management would be the first step towards restoring that confidence and to avoid any suboptimal liquidation of assets. iv. The IL&FS Group is involved in many infrastructure projects by way of project financing and also equity and debt financing. Any impairment in its ability to finance and support the infrastructure projects would be quite damaging to the overall infrastructure sector, financial markets and the economy, considering its systemically important nature and its borrowing level of Rs. 91000 crores. The business model of IL&FS is such that the company borrows from the money market and debt market besides bank borrowing to fund its income generating activities and assets, which are medium ....
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....es has been shown as Annexure D, as follows: 5. With regard to the aforesaid 133 entities of the 'IL&FS Group Companies (Offshore) incorporated outside the territorial jurisdiction of India as shown at Annexure D, prayer has been made that these 'Offshore Group Entities' be excluded from the purview of the interim order passed by this Appellate Tribunal on 15th October, 2018, though, the resolution of the 'Offshore Group Entities' will be subject to the decision of the management of the Board of Directors and supervision of the Hon'ble Justice (Retd.) D.K. Jain." 10. This Appellate Tribunal accordingly passed further order as follows: - "6. Taking into consideration the stand taken by the 'Union of India' as agreed by the 'IL&FS', we exclude '133 Offshore Group Entities' incorporated out of India as shown in Annexure D from the purview of our order dated 15th October, 2018. However, the resolution for those 'Offshore Group Entities' may be taken up by the Board of Directors of 'IL&FS' under the supervision of the Hon'ble Justice (Retd.) D.K. Jain. The decision as may be taken with regard to the 'Offshore Group Entities' incorporated outside the territoria....
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....n'ble Justice (Retd.) D.K. Jain. 13. Taking into consideration the stand taken by 'Union of India' and 'IL&FS', we allow the Board of Directors of 'IL&FS' and to permit all "Green Entities" including the entities which may be declared 'Green' out of the 100 entities to service their debt obligations as per scheduled repayment, which should be within the 'Resolution Framework' as described in the affidavit dated 25th January, 2019 and subject to the supervision of the Hon'ble Justice (Retd.) D.K. Jain. 14. In so far "10 Amber Entities", prayer has been made to permit "Amber Group Entities" to make necessary payments only to maintain and preserve them as "Going Concern". 15. Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of 'IndusInd Bank' while submits that the 'IndusInd Bank' is lender of one of the "Amber Group Entities", further submits that 'IndusInd Bank' should be allowed to participate in the 'Resolution Process'. 16. Mr. Abhinav Vashisht, learned Senior Counsel appearing on behalf of the 'Senior Secured Financial Creditor' wants to raise objection with regard to the prayer made on behalf of the 'Union of India' and '....
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....e., Offshore Group Entities were excluded from the purview of interim order passed by this Appellate Tribunal on 15th October, 2018. However, 'resolution' of Offshore Group Entities has been allowed subject to decision of the Management of the Board of Directors and supervisions of the Hon'ble Justice (Retd.) D.K. Jain. 12 Twenty-two entities have been classified as 'Green Entities', who were in a positon to clear the dues of many of the Secured Creditors including the Interveners/ Respondents, who are objecting and derived the benefit of the interim order. Thirteen Entities were declared "Amber Entities" who had the ability for making payment to some of the Senior Secured Creditors as and when fall due. Many of them had the cash flow sufficiency to meet current operational payments. In fact, out of 13 Amber entities, four were declared 'Green Entities' who can meet the liability of Secured Creditors and other creditors. It is only the Red Entities, which are about 55 in number, with regard to whom the resolution process is yet to be started. 13. It is informed that against Rs. 91,000 crores, for about Rs. 40,000 crores resolution plans are pending consideration. Pursuant to ....
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....ities was considered. Out of them three entities namely (i) Moradabad Bareilly Expressway Limited; (ii) Jharkhand Road Projects Implementation Company Limited; and (iii) West Gujarat Expressway Limited have been declared green entities. 2. It has been ordered to pay the dues of all the 'Financial Creditors' as per schedule of repayment and many of the Creditors have already been paid. 3. It is stated that out of the rest 10 Amber entities with regard to one entity namely 'ITNL Road Infrastructure Development Company Ltd.', a settlement has been entered with its Concessioning Authority as per which the said Amber entity will receive approx. Rs. 144 crores and the said amount will be utilized for cost of settling the liability of all the Creditors for which the meeting of the Creditors of the said Company has been called for. 4. It is submitted that there is a chance of settlement and if it is reached, the amount will be released. The matter will be reported by the next date. 5. In relation to remaining 10 Amber Entities, including one which we have already discussed above, the following chart flow have been shown:- 6. Learned Sr. Co....
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....rned counsel for the ILFS and Union of India will also state as to what step is to be taken on payment of dues of different funds such as 'Pension Funds', 'Gratuity Funds', 'Provident Fund', 'Insurance Funds' including 'Army Group Insurance Funds' etc. as ordered on 12th July, 2019. I.A. No.___/2019 Ms. Nimisha Jain, Advocate appears on behalf of National Highways Authority of India and submits that though she and Ms. Divya Bhalla, Advocate appeared on behalf of National Highways Authority of India, but in the order dated 30th August, 2019, the presence was wrongly recorded on behalf of Union of India. It is accordingly ordered to read the presence of Ms. Divya Bhalla and Ms. Nimisha Jain as Advocates for the National Highways Authority of India in the order dated 30th August, 2019. Necessary corrections be made in the appearance of the said order dated 30th August, 2019 and free copy of the same be supplied to the Counsel, i.e., Ms. Divya Bhalla and Ms. Nimisha Jain and others. I.A. is disposed of. Post these appeal(s) for 'Orders' on 18th November, 2019 at 3.00 P.M." 17. Time to time interim orders were passed enabling the Entities to resolve to pay ....
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....right in property i.e. the right to recover the interest and principal amounts thereunder, by modifying the terms of such contract inter alia by way of resolution framework report dated 25.10.2019 ("Resolution Framework Report"), save under authority of law. 19.4 No proceeding in respect of HREL under Section 241 before the Hon'ble Adjudicating Tribunal: No proceeding was initiated under Section 241 of the Act against HREL, before the Hon'ble Adjudicating Tribunal. Therefore, no order under Section 242 of the Act could have been made one, in respect of HREL; and second in respect of lenders who are counter parties of contracts entered by HREL. 19.5 HREL not even a party to the proceedings before Hon'ble Appellate Tribunal: The Hon'ble Appellate Tribunal cannot make orders in relation to counter-parties of HREL when HREL is not an Appellant in the instant matter and even L&T IDF and IIDL have not made HREL a party to the Appeals. 19.6 Beyond the scope of power to interfere/ modify with third party contracts under Section 241/242 of the Act: (i) The proviso to Section 242(2)(f) of the Act provides that any variation of a contract entered into with a third party can ....
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....ogation of the well settled principle of a subsidiary being a separate legal entity. (iii) HREL is a separate legal entity entirely unaffected by insolvency/ cashflow issues of IL&FS. 19.8 Other aspects concerning jurisdiction of the Hon'ble Appellate Tribunal in the present proceedings: (i) In the Appeals filed by the respective Appellants, there is no a whisper of a stay on the normal debt servicing by any company of IL&FS Group. Therefore, the Interim Order does not restrict normal debt servicing. However, the subsequent orders starting with order dated 11.02.2019 travel beyond the relief sought in the Appeals. The Union of India (acting at the instance of the IL&FS) has misled the Hon'ble Appellate Tribunal during the course of present proceedings. All affidavits of the Union of India in relation to the Resolution Framework Report, starting with the affidavit dated 25.01.2019, merely rubber stamp the decisions of IL&FS board (all affidavits of Union of India are entirely based on the letters of IL&FS enclosed to such affidavits), and therefore cannot be taken to be the stand of Union of India. (ii) The Union of India and IL&FS have filed an appeal ....
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....ounsel appearing on behalf of Bajaj Finance Limited submitted that this Appellate Tribunal does not have the jurisdiction to pass any orders under Sections 241 and 242 of the Companies Act, 2013 including the 15th October, 2018 order. It was submitted that settled principle of law laid down inter-alia under P. Ramesh Kumar v. Dr. Shankernarayana Gupta (2011) 100 CLA 125 (CLB) that the Tribunals do not have the jurisdiction under Section 242 of the Companies Act, 2013 to interfere with the day to day management of the affairs of a company. Such powers are vested with the shareholders and Board of Directors of the concerned Company. It was submitted that when the Tribunals exercise their powers under Section 242 of the Companies Act, 2013 and appoint a new Board of Directors to manage the affairs of the concerned company, the management of the Company should be vested with such new board and the Tribunals do not have the jurisdiction to interfere with the commercial wisdom of such new Board in managing the affairs of such company. 22. It was submitted that the NCLT Mumbai vide its 1st October, 2018 order appointed the New Board to manage the affairs of the ILFS Group as per the ar....
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....icted only to the extent of bringing an end to the mismanagement of IL&FS Entities by the Erstwhile Board which was already done by the NCLT's order suspending the Board of Directors of the ILFS Group and reconstituting the Board with new Directors under Section 241 of Companies Act, 2013 along with subsequent orders issuing substantial and sufficient safeguards to the New Board to conduct the management and affairs of the ILFS Group. It was also submitted that the Tribunals do not have the Authority to pass an order similar to moratorium under IBC or any such order which prejudicially affects the rights of third parties. 25. Mr. S.N. Mukherjee, learned Senior Counsel appears on behalf of Aditya Birla Finance Ltd. and Wavell Investment Private Limited made the following submissions: - (i) The Tribunal's powers under Section 241(1) and 241(2) of the Companies Act, 2013 are identical. Section 242 makes no distinction between orders under Section 241(1) and 24292). As such, Section 241(2) merely grants an additional right to the Central Government to file a petition if it is of the opinion that the affairs of the company are being run in a manner prejudicial to public inte....
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.... him, the AGIF had infused the funds contributed as compulsory deduction from the army personnel in secured non-convertible debentures issued by IL&FS and IFIN. These companies are presently categorized as 'Red Entities'. Principal debt of Rs. 210 crore along with applicable interest is due and payable to AGIF. AGIF collects the deductions from every soldier of the Indian Army and seeks to provide inter alia the relief to the kith and kin of the army personnel i.e. the widows, children and their aging parents. AGIF herein is espousing the sacred cause for social security of widows/ orphans/ old parents/ next of kin of the martyred soldiers while they were selflessly defending the national boarders in extremely hard, dangerous and challenging situations. It is submitted that this Appellate Tribunal on 12th July, 2019 directed the ILFS and Union of India to specifically state as to what steps they will take to release the amount payable to 'Pension Fund', 'Provident Fund', 'Army Group Insurance Fund', 'Gratuity Fund', 'Superannuation Fund', 'Postal Life Insurance Fund' etc. if invested in one or other 'Red Entity'. It was made clear that if any fund is generated, this Appellate Tribu....
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....ant majority of the cases, and that but for such deployments many of the ILFS Group companies would not have been able to complete their projects and generate cash flows." 31. It was submitted that in the face of the above, permitting certain 'Green' companies to discharge their debt obligations to third parties would work serious injustice to entities such as AGIF who infused funds to ILFS/ IFIN as such. 32. It was further therefore submitted that the distribution framework/ revised distribution framework as proposed by the Union of India is not in keeping with the orders of the Hon'ble NCLAT dated 12th July, 2019. It was prayed that any money which is generated by ILFS Group should be, after realization of the resolution costs, first applied towards repayment of the dues of AGIF. 33. Union of India and IL&FS have justified the interim order passed by this Appellate Tribunal on 15th October, 2018. According to the learned Counsel for the Union of India and IL&FS, those who have already derived advantage of the interim order should not be allowed to raise objection at this belated stage. 34. The learned Counsel highlighted the benefits of the interim order derived by th....
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....ayable to the Applicants, IL&FS Group was required to maintain Majority Control in HCPL [Clause14.3] (c) In terms of the Settlement Terms, HCPL incorporated Jeedimetla (an SPV wholly owned by HCPL) and the irrevocable development rights in Kondapur Lands and Jeedimetla Lands situated at Andhra Pradesh were vested in it. (d) Jeetimetla was to develop a project on the abovementioned lands as per its business plan. All free cash flows from the project were to be utilised first towards payments due and payable to the Applicants with respect to Tranche 3 obligation [Clause 6.4.7-6.48] (e) In case of default in purchase of the CCDs under Tranche 3, the Applicants will be entitled to Takeover Rights i.e. the right to take over the share capital of Jeedimetla which holds the Kondapur and Jeedimetla Lands for development of the project[Clause 6.5.2]. These lands have thus been segregated and kept aside to secure the fulfilment of obligation of HCPL under Tranche 3 of the Settlement Terms. (f) In case of default in purchase of CCDs under Tranche 4, HCPL will, and IL&FS will cause HCPL to, liquidate HCPL and its subsidiaries' properties and assets of ....
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....e, as are required to satisfy the obligation to purchase the Tranche 4 CCDs. The Applicants thus have a right to liquidate HCPL and its subsidiaries for enforcing its rights under Tranche 4. Therefore, any sale of IL&FS stake in HCPL will result in violating the Settlement Terms and the Applicants will be left remediless insofar as the rights under Tranche 4 is concerned. In September2019, IL&FS has issued an Invitation for EOI for disinvestment of the 80% equity stake held by it in HCPL. The Invitation for EOI is contrary to the terms of the Settlement Terms, in particular Clause14.3, which reads as below: - " As long as any amounts are due and payable to the Investors in terms hereof, IL&FS Group will continue to have Majority Control over MPL and MPL Subsidiaries." Majority Control has been defined as "the power to exercise at least 40%( forty per cent) of the voting rights attached to voting securities, together with management control of MPL". 42. It was submitted that the Invitation for EOI is contrary to the Settlement Terms/Consent Decree, which will be clear from the chart below: "Invitation for EOI Settlement Terms • Proposed sale of equi....
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....nd the matters complained of, make such order as it thinks fit'. 45. The present case shows that prima facie case has been made out by the Central Government that the affairs of the six Companies of IL&FS & Group Companies are being conducted in a manner prejudicial to the public interest and there is a likelihood of the winding up of the Company for the reasons in view of the facts as discussed above. Therefore, the Tribunal with a view to bring an end to the matter complained of is required to pass final order. 46. The question is before passing final order, what nature of interim order can be passed in the present case. 47. Section 242(4) deals with the interim order: - "242. Powers of Tribunal (1), (2), (3) xxx xxx xxx (4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company's affairs upon such terms and conditions as appear to it to be just and equitable." 48. Therefore, it is clear that for regulating the conduct of the company's affairs upon such terms and conditions, it is open to the Tribunal to pass interim order, which is just and eq....
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.... personally works for gain. (4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)." 50. From the aforesaid provision, it is clear that Tribunal/ Appellate Tribunal is required to follow principles of natural justice and other provisions of the 'Companies Act, 2013' or the 'Insolvency and Bankruptcy Code, 2016' and of any rules made thereunder for regulating its own procedure. Since the amendment of Section 424 with effect from 15th November, 2016, the Tribunal/ Appellate Tribunal is vested with the power to follow the procedure of Insolvency and Bankruptcy Code, 2016, in addition to the procedure laid down in the Companies Act, 2013 and the rules framed under the aforesaid Code and Act. 51. The Hon'ble Supreme Court in "Swiss Ribbons Pvt. Ltd. and anr vs. Union of India and Ors. - (2019) 4 SCC 17" noted the statement of ....
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....ndustrial Companies (Special Provisions) Repeal Act, 2003, the Payment and Settlement Systems Act, 2007, the Limited Liability Partnership Act, 2008, and the Companies Act, 2013." The Hon'ble Supreme Court further observed: - "27. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corpor....
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....teps should be taken for resolution of the Corporate Debtor and death of Corporate Debtor (Company) is not the answer. In IL&FS and its Group Companies, the aggravating situation has been noticed and highlighted, which called for interim order in the nature, which we have already passed on 15th October, 2018. 54. It is true that power of moratorium us Section 14 of the I&B Code cannot be exercised under the Companies Act, 2013, but same power can be exercised by Tribunal under Section 242(4) of the Companies Act by way of an interim order, if the Tribunal thinks fit for regulating the conduct of the Company's affair upon such terms and conditions, which is just and equitable. 55. Apart from Union of India and IL&FS, major investors like State Bank of India has accepted that the present case is unique and unprecedented involving resolution of IL&FS and its 302 Group Companies including Off-shore entities. It is accepted that because of interim order, resolution plan of Rs. 40,000 crores has offered and there is likelihood of getting Rs. 10,000 crores to Rs. 20,000 crores more. It has also been noticed that all the 133 Off-shore Companies (incorporated outside India) have been ....
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.... to all the stake holders are the object to be kept in mind while following any Resolution Framework for the IL&FS Group Companies. 61. The Union of India on the basis of the present procedure as is followed under the guidance of this Appellate Tribunal and under the supervision of Hon'ble Justice (Retd.) D.K. Jain, has highlighted the key of the Resolution Framework as follows: - "Key Highlights of the Resolution Framework Initial Resolution Framework (1) As set out above, the Initial Resolution Framework and the First Addendum were filed by the Appellant with this Hon'ble Tribunal vide the January 25 Affidavit. (2) The Initial Resolution Framework sets forth that an 'asset by asset' solution, being explored through various methods i.e., an "Asset Level Resolution" (and in some cases, the sale of the business vertical comprising of a basket of companies) is the most feasible option for the resolution of Respondent No.1. Group. (3) Set out below are the salient features of the Initial Resolution Framework: (i) Crystallisation of claims as of "Cut-Off Date" (i.e. October 15, 2018): No interest, additional interest, default int....
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....11, 2019) for his approval. (viii) Approval of the Hon'ble NCLT: Upon receipt of approval of Justice (Retd.) D.K. Jain, the proposal will be placed with the Hon'ble NCLT for its approval. Upon receipt of approval of the Hon'ble NCLT and payment of consideration by the successful bidder, the shares/assets of the relevant Sale Company will be transferred free and clear of all encumbrances, liens, third party rights to the successful bidder." 62. Initially, it was suggested that distribution in accordance with I&B code be followed. Now it is suggested that following distribution procedure should be followed in the public interest:- "4. Public Interest Rationale for 'Fair and Equitable' Distribution to Creditors (15) Given the circumstances unique to the Respondent No. 1 Group, it is submitted that the Resolution Framework (including the Revised Distribution Framework in the Second Addendum) ought to be approved by this Hon'ble Tribunal in view of the following: (i) as of October 8, 2018, the aggregate principal amounts of the external fund based debt exposure of the Respondent No.1 Group was approximately INR 94,000 crores (in addition to a non-f....
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....ings. (iii) the intervention of the Appellant that was necessitated on account of the public interest aspects relating to the Respondent No. 1 Group and to avoid the catastrophic effect of the Respondent No. 1 defaults on the Indian financial markets (as elaborated in the DEA Report) and the replacement of the erstwhile board of directors of Respondent No. l by the New Board vide the October 1 Order on account of the burgeoning debt levels at the Respondent No. 1 Group and mismanagement of the erstwhile board of directors of Respondent No. l; (iv) the resolution of the Respondent No. 1 Group which comprises of 302 entities (of which 169 are Domestic Group Entities, and 133 entities are incorporated in jurisdictions outside India) is being undertaken under Sections 241/242 of the Companies Act, 2013 (which provides this Hon'ble Tribunal with very wide powers to pass orders that are 'fair and equitable'), is a test case for 'group insolvency' in India and represents a watershed moment in the relatively recent and evolving insolvency and bankruptcy laws of India. It is pertinent to note that currently, no framework exists under Indian law, which pertains to or could ....
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....implementing a 'fair and equitable' resolution framework, to ensure that interests of all stakeholders are considered and balanced. It is pertinent to note that the Respondent No.1 Group has operations across more than 10 distinct business verticals and are spread across 4 different continents and more than 10 countries, and accordingly, given this diverse presence of the Respondent No.1 Group, the resolution process of the Respondent No.1 Group, the resolution process and mechanisms have to be formulated after evaluating the judicial/ regulatory processes across business sectors and jurisdictions; and (viii) the resolution of the Respondent No.1 Group, in larger public interest considering the impact on the various classes of stakeholders across various levels in the Respondent No.1 Group, will assist in restoring the confidence of Indian and foreign investors, and have a positive impact on the Indian bond market." 63. The State Bank of India has suggested the following distribution formula for 'Red' and 'Amber Entities' of IL&FS "(i) SBI is the lead financial creditor with respect CNTL and some other IL&FS group entities along with other secured financial cre....
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....for a decision on such bids. (v) A central Co-ordinating Team under the supervision of a Former Judge/ Senior Advocate comprising 7 to 8 representative of IL&FS, senior lender banks, Resolution Consultant may further be constituted for monitoring and supervising the developments." 64. As noticed that many of the Financial Creditors/ Secured Creditors are opposing the aforesaid distribution, but wanted the distribution as per Section 53 of the I&B Code. However, we are not inclined to follow the procedure of I&B Code including Section 53, as this is a case where public interest is involved for the following reasons: - (i) Over the years the IL&FS has inducted institutional shareholders to include Life Insurance Corporation of India (LIC), ORIX Corporation- Japan (ORIX), State Bank of India and Abu Dhabi Investment Authority. Besides the above, the 'IL&FS Employees Welfare Trust' also holds significant shares in 1st Respondent. The shareholding pattern of the IL&FS, as on 31st March, 2018, as already been noticed, which includes share holding of Central Bank of India; State Bank of India; UTI-Unit Linked Insurance Plan,; India Discovery Fund, Housing Development ....
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....its approval and if approved such proposal should be placed before the NCLT for its approval. Upon receipt of such approval, only the shareholding of HCPL be transferred. 69. If no terms of settlement is reached or decision is disapproved by Hon'ble Justice D.K. Jain or the NCLT, in such a case, the NCLT will decide the claim of the Applicant - SRS Orion Investments Ltd. and others. The Interlocutory Application No.3616 of 2019 filed by SRS Orion Investment Ltd. and others and the objections raised by some of the Lenders stands disposed of. 70. Applications, which are filed for renewal of the Fixed Deposit, are allowed. They are allowed to be renewed for another period of three months. 71. Other Interlocutory Application in which other prayer has been made will be taken up on the subsequent dates as may be fixed. 72. The Union of India, the Board of Directors of IL&FS and the 'Committee of Creditors' already constituted or which may be constituted are directed to conclude resolution of all the Entities preferably within 90 days. The development should be brought to the Notice of this Appellate Tribunal every month. Place the case 'for orders' on 14th April, 2020. ....
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....ad Expressway Limited Elsamex Colombia SAS 45. Elsamex India Pvt. Ltd. 46. Elsamex Internacional S.L.U. 47. Elsamex Maintenance Services Limited 48. Elsamex Portugal S.A 49. Elsamex Road Technology Company Limited 50. Elsamex Roads and Infrastructure WLL 51. Elsamex S.A 52. Elsamex Vietnam Joint Stock Company 53. ESM Mantenimiento Integral de SA de CV 54. Etesian Urja Limited 55. Fagne Songadh Expressway Limited 56. Free Trade Warehousing Private Limited 57. Futureage Infrastructure India Limited 58. Geotecnia y Control de Qualitat SA 59. GRICL Rail Bridge Development Company Limited 60. Grusamar Engenheria & Consultoria Brasil Ltda 61. Grusamar India Limited 62. Grusamar Ingenieria Consulting Colombia SAS 63. Grusamar Ingenieria Y Consulting, SLU 64. Grusamar Progescan UTE Areas De Servicio Gujarat Industrial Infrastructure Project Limited 66. Gujarat Integrated Maritime Complex Pvt Ltd 65. 67. Gujarat International Finance Tec-City Company Limited 68. Gujarat Tourism Opportunity Limited 69. Haldia Integrated Development Agency Limited 70. Hazaribagh Ranchi Expressway Limited 71. Hill County ....
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.... 126. IL&FS Wind Energy Limited 127. IL&FS Wind Power Services Limited 128. IMICL Dighi Martime Ltd. 129. India Tourist & Heritage Village Pvt. Ltd. 30. Indraprastha Energy and Waste Management Company Limited Document 4 131. Infrastructure Development Corporation of Assam Ltd 132. Infrastructure Development Company of Nagaland Pvt. Ltd. 133. Infrastructure Leasing & Financial Services Limited 134. Integrated Trans Log Development Company Limited 135. Intevia-Grusamar-Dair UTE Seguridad Vial Bizkaia 136. Intevial Gestao Integral Rodoviaria, S.A. 137. INTL International DMCC 138. ISSL Settlement & Transaction Services Limited 139. ITNL Africa Projects Limited 140. ITNL IECCL JV 141. ITNL Infrastructure Developer LLC 142. ITNL International Pte Limited 143. ITNL KMB JV 144. ITNL Offshore Pte Ltd. 145. ITNL Offshore Three Pte Ltd. 146. ITNL Offshore Two Pte. Ltd 147. ITNL Road Infrastructure Development Company Limited 148. ITNL Road Investment Trust 149. ITNL Toll Management Services Limited 150. Jharkhand Accelerated Road Development Company Limited 151. Jharkhand E-Governance Solutions & Services Limited....
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.....A.U. 209. Shendra Green Energy Limited 210. Sikar Bikaner Highway Limited 211. Sipla Wind Energy Ltd. 212. Skill Training Assessment Management Partners Limited 213. Sociedad Concesionaria Autovia A-4 Madrid S.A. 214. South Coast Infrastructure Development Company of Andhra Pradesh Limited 215. Srinagar Sonamarg Tunnelway Limited 216. Standard Chartered IL&FS Investment Management (Singapore) Pte Limited 217. Surya Urja Company of Rajasthan Limited 218. Swayam Swachatta Initiative Limited 219 Syniverse Technologies India Private Limited 220 Tadas Wind Energy Limited 221. Tamil Nadu Water Investment Company Limited Document 6 222. Thiruvananthpuram Road Development Company Limited 223. Tierra Enviro Limited 224. Unique Waste Processing Company Limited 225. Urban Mass Transit Company Limited 226. Urjankur Shree Tatyasaheb Kore Warana Power Company Limited.2 227. UTE Argentona Elsamex Rubai 228. UTE Abastecimiento Metilla 229. UTE Abedul Orihueia 230. UTE Abedul Ponferrada 231. UTE Abedul Villavidel 232. UTE Abedul Zamora 233. UTE Aena Almeria 234. UTE Albartera 235. UTE Almanzora 236. UTE Alu....
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.... S.R.L 298. Vizag Agriport Pvt. Ltd. 299. Warora Chandrapur Ballarpur Toll Road Limited 300. West Gujarat Expressway Limited 301. Wind Urja India Private Limited 302 Yala Construction Company Pvt. Ltd. GO ART Rubing Yasmin Arra INDIA Document 8 ANNEXURE C-LIST OF INDIAN IL&FS GROUP ENTITIES S. No. 1. 2. Name of the Indian IL&FS Group Entity IL&FS Financial Services Limited IL&FS Investment Managers Limited 3. IL&FS Securities Services Limited IL&FS Transportation Networks Limited Chattisgarh Highway Development Company Limited IL&FS Airports Limited 4. 5. 6. 7. IL&FS Education & Technology Services Limited 8. IL&FS Energy Development Company Limited NOW 9. IL&FS Environmental Infrastructure & Services Limited 10. IL&FS Infrastructure Equity Fund 11. IL&FS Investment Trust-I 12. IL&FS Maritime Infrastructure Company Limited IL&FS Paradip Refinery Water Limited 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. IL&FS Portfolio Management Services Limited IL&FS Township & Urban Assets Limited IL&FS Water Limited Jharkhand Accelerat....
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....way Limited MP Border Checkpost Development Company Limited North Karnataka Expressway Limited Pune Sholapur Road Development Company Limited 72. Rapid Metro Rail Gurgaon Limited 73. Ranchi Muri Road Development Limited 74. 75. 76. Sikar Bikaner Highway Limited Vansh Nimay Infraprojects Limited West Gujarat Expressway Limited 77. Rapid Metro Rail Gurgaon South Limited 78. Khed Sinnar Expressway Limited 79. Barwa Adda Expressway Limited 80. 81. 82. Jharkhand Limited Infrastructure Implementation Company Amravati Chikhli Expressway Limited Fagne Songadh Expressway Limited 83. GRICL Rail Bridge Development Company Limited 84. 85 Elsamex India Private Limited Grusamar India Limited NOTARY Document 10 86. 8888 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. Yala Construction Company Private Limited Elsamex Maintenance Services Limited Jorabat Shillong Expressway Limited Thiruvananthapuram Road Development Company Limited Warora Chandrapur Ballarpur Toll Road Limited ITNL Toll Management Services Limited Noida Toll Bridge Company Limited....
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....ial Water Utility Company Limited 147. Integrated Trans Log Development Company Limited 148. Bengal Integrated Infrastructure Development Limited 149. Bengal Urban Infrastructure Development Limited 150. Damodar Valley Tourism Development Private Limited 151. Gujarat Industrial Infrastructure Projects Limited 152. Gujarat Tourism Opportunity Limited 153. Infrastructure Development Company of Nagaland Private Limited 154. 155. 156. Infrastructure Development Corporation of Assam Limited Jharkhand Infrastructure Development Corporation Limited KSIIDC-IL&FS Project Development Company Limited 157. Orissa Project Development Company Limited 158. South Coast Infrastructure Development Company of Andhra Pradesh Limited 159. Uttarakhand Infrastructure Projects Company Limited PDCOR Limited 160. 161. Free Trade Warehousing Private Limited 162. Canopy Housing & Infrastructure Limited 163. Urban Mass Transit Company Limited 164. Bhopal e-Governance Limited 165. LIVIA India Limited 166. Ramky Elsamex Hyderabad Ring Road Limited 167. Infrastructure Leasing & Financial Services 68. ITNL KMB JV/PLSC Kyim....
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.... 54. Standard Chartered IL&FS Investment Management (Singapore) Pte Limited Vias Y Construcciones Viacon S.R.L UTE Embalse de Flix 55. 56. 57. Cons. Jose Saldis 58. 59. 60. 61. UTE Elsamex-ITNL 62. 63. 64. 65. 66. UTE Dair-Intevia UTE Conservación Cádiz Sur (MartÃn Casillas) UTE Argentona Elsamex Rubai UTE SG 2/2008 Grusamar Progescan UTE Areas De Servicio UTE Arucas Intevia-Grusamar-Dair UTE Seguridad Vial Bizkaia UTE Abedul Orihueia 67. UTE Abedul Ponferrada 68. UTE Abedul Villavidel 69. UTE Abedul Zamora 70. UTE Almanzora 71. UTE Asistencia Molinar 72. 73. 74. UTE Atenea-Paymacotas UTE Camino Santiago UTE Bizcaya Bi 75. UTE Conservacion Almeria UTE Conservacion Caceres UTE Grusamar-Eyser UTE Grusamar-Inserco Rambia Relamar UTE Parking Estacion Intermodal UTE SG-2/2011 76. 77. 78. 79. 80. 81. UTE Tren Mallorca 82. 83. JV Elsamex-Ascon 84. UTE Elsamex- Pulido 85. UTE AP-7 Ondara 2 Consorcio Elsamex-Grusamar Ecuador 86. UTE ESM Movilidad Ciesm 87. UTE Etopia 35 88. UTE Sistema Tar....
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....17. Maytas Logiparks (Isnapur) Private Limited 18. Wind Urja India Private Limited 19. Kaze Energy Limited 20. Etesian Urja Limited 21. Tadas Wind Energy Private Limited 22. Khandke Wind Energy Private Limited This entity has been classified as a "Green Company" based on representations made to the IL&FS management that the Government of Tamil Nadu, which is one of the shareholders of the company and the only financial creditor of the company shall provide suitable relaxations (in respect of its loan) to enable the company to meet its payment obligations. 16902 Maytas Logiparks (Isnapur) Private Limited does not form part of the 301 IL&FS ap Entities which was filed with the NCLT, but is subsidiary of Hill County perties Limited, which was listed as an indirect associate of IL&FS VIONI Document 16 ANNEXURE F-LIST OF "AMBER"-INDIAN IL&FS GROUP ENTITIES Hazaribagh Ranchi Expressway Limited Sr. No. 1. Name of the "Amber"- IL&FS Group Entity Chenani Nashri Tunnelway Limited 2. East Hyderabad Expressway Limited 3. 4. 5. 6. 7. 8. Jorabat Shillong Expressway Limited 9. ITNL Road Infrast....
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....L KMB JV/PLSC Kyimetrobud (KMB) Note: Where the relevant "Red" - Indian IL&FS Group Company does not have senior secured financial debt, the unsecured (operational and Document 18 financial) debt of that Indian IL&FS Group Company has been considered, which also cannot be fully paid as and when it falls due. Document 19 No. CHART IN RELATION TO REMAINING 19AMBER COMPANIES VISA VIS OUTCOME OF MEETINGS WITH THEIR LENDERS AFFIDAVIT DATED SEPTEMBER 4, 2019 Name of the Amber Entity, Proposal and States of Resolution/ Asset Sale Process Jorabat Shillong Expressway Limited (SEL) Proposed Haircut to be taken by all lenders-42% Additionally other concession such as reduction in interest rate and elongated repayment schedule Bid Status: Binding bid for this entity has been received on August 30, 2019, which is being evaluated by AFS Chennai Nashri Tanachway Limited (CNTL) Proposed Haircut to be taken by al lenders-10% Additionally ofher concession such as reduction in interest rate and elongated repayment schedule Bid Status: Binding bid for this entity has been received on August 30, 2019, which is being evaluated by ILAFS ....
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....by IL&FS East Hyderabad Expressway Limited (EHEL) Proposed Haircut to be taken by all lenders-21% Additionally other concession such as reduction in interest rate and elongated repayment schedule Bid Status: No bid received for this entity. 6. Hazaribagh Ranchi Expressway Limited (HREL) Bid Status: Rinding bid for this entity has been received on August 30, 2019, which is being evaluated by IL&FS IndiaFirst Life Insurance Company Limited b. Hewlett-Packard Financial Services Reference Pps 18-21 &247-281 Both by email dated August 23, 2019 have provided in-principle confirmation on (Annexure 6) restricting proposal with minor qualification. State Bank of India-One of the secured lenders-Vide its letter dated August 26, 2019 agreed to consider reduction in interest rate subject to review of financial statements. However, communicated its unwillingness to extend the repayment schedule. Bhopal Co-Operative Central Bank Limited-Unsecured Lender-Declined the proposal Direction-Upon completion of the bid evaluation process, lenders may consider the proposal provided by the highest bidder at the creditors' committee, t....