TaxTMI 
TaxTMI 
2024 (9) TMI 1553
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....k Bhushan, J. These three applications have been filed praying for several reliefs as we shall notice hereinafter. 2. We have heard Shri Ramji Srinivasan, Learned Senior Counsel appearing for the IL&FS, Shri Abhijeet Sinha, Learned Senior Counsel for the ICICI Bank, Shri P. Nagesh, Learned Senior Counsel for Howen International Fund and Shri Krishnendu Datta, Learned Senior Counsel for the MEPL. 3. Brief background facts and sequence of the events necessary to be noticed for deciding these applications are:- 3.1. In Company Petition filed by the Union of India under Section 241 and 242 of the Companies Act, 2013, NCLT passed an order dated 01.10.2018 suspending the board of directors of IL&FS and vested its management in six nominated directors. In Company Appeal (AT) No.346 of 2018, this Tribunal passed an order on 15.10.2018 granting a stay on institution and continuation of suits or any legal proceedings against the IL&FS Group. Various Affidavits and Reports were filed by Union of India in Company Appeal (AT) No.346 of 2018. By order dated 12.03.2020, this Tribunal approved the resolution framework proposed by the Union of India for resolution of IL&FS and its group....
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....sed various objection in the CoC meeting and IA No.31 of 2023 was filed by the ICICI Bank before the NCLT, Mumbai challenging the decision of the CoC to vote for the resolution of IECCL and certain other reliefs. After filing of IA No. 31 of 2023 by the ICICI Bank before the NCLT, IA No.5036 of 2023 has been filed by the IL&FS before this Tribunal. On 19.10.2023, this Tribunal where IL&FS has prayed to grant a relief as part of the IL&FS resolution framework for resolution of category II companies by permitting writing down of the entire share capital of such Category II companies upon payment of the bid value/proceeds without the requirement of obtaining any further approvals from the shareholders of such Category II Companies. H-1 Bidder had given his revised bid in July 2023 which was placed before the CoC for voting. By letter dated 03.04.2024 written by IL&FS to the H-1 Bidder, extension of validity of bid was sought till 30.06.2024. In IA No.5036 of 2023 where IL&FS has made prayers with regard to Category II Companies, this Tribunal vide order dated 19.03.2024 directed the IL&FS to upload a copy of the application on the website so as to invite objections by all concerned to....
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....tern for IECCL is as follows: Entity Shareholding Percentage IL&FS 20.965 IL&FS Financial Services Ltd. ("IFIN") 21.29% SBG Projects Investments Ltd. ("SBG") 27.87% Public Shareholders 29.88% Thus, the IL&FS group holds 42.25% of the share capital of IECCL. The remaining shareholding i.e., 57.75%, is distributed between SBG Projects Investments Ltd. and other public investors." 5. The shareholding of IL&FS and IFIN is 42.25% which is an admitted fact. As per the Resolution Framework approved by this Tribunal vide order dated 12.03.2020, IL&FS issued an invitation for Expression of Interest on 13.01.2021. It is useful to extract the Invitation for Expression of Interest dated 13.01.2021 which is as follows:- IL&FS Invitation for Expression of Interest Sale of Shares held by Infrastructure Leasing & Financial Services Limited ("IL&FS") and IL&FS Financial Services Limited ("IFIN") in IL&FS Engineering and Construction Company Limited ("IECCL") In furtherance of the advertisements dated October 01, 2020 issued by IL&FS in The Economic Times, The Maharashtra Times and The Nava Telangana ("Initial Advertisements"), expressions of ....
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....ution of IECCL as undertaken by the IL&FS. In the CoC meetings, ICICI Bank raised objections stating that the bid value provided by the consortium is lower than the liquidation value. In the reply to the above application, the ICICI Bank has given the details of liquidation value of IECCL in paragraph 8 of the reply. Paragraph 8 of the reply is as follows:- "8. The New Board also appointed two agencies- Adroit Valuation ("Adroit") and RNC Valuecon LLP ("RNC")- to conduct valuation of IECCL, which was determined as follows ( in crore ) : - Valuer Fair Market Value (as on 30 September 2020) Liquidation Value (as on 15 October 2018) Liquidation Value (as on 30 September 2020) Adroit 1231.6 529.8 674.6 RNC 2166.2 1436.99 1460.1 Average 1698.9 983.395 1067.35 As per the valuation commissioned by the New Board, the average liquidation value of IECCL as on 15 October 2018 was INR 983.395 Crore." 7. As noted above, the ICICI Bank had filed an application IA No.31 of 2023 before the NCLT praying for various reliefs which application, however, was subsequently withdrawn after filing of IA No.5036 of 2023 by the IL&FS. 8.....
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....bal Opportunity Fund SPC) ("Almas") and Markolines Pavement Technologies Limited ("Markolines") (Markolines together with the Almas forms "Consortium") initiating the process in accordance with the terms of the Process Note for the sale of the 42.25% of the issued, subscribed and paid up share capital of IECCL held collectively by IL&FS and IFIN. Pertinently, the said Process Note is as per the current Resolution Framework i.e. it does not contemplate write down of 100% share capital of IECCL in exchange for the bid value received. (xiii) Accordingly, a binding bid dated January 7, 2022 read with the email dated April 6, 2022 was submitted by the Consortium ("Bid") for acquiring 42.25% of the issued, subscribed and paid up share capital of IECCL held collectively by IL&FS and IFIN, which was placed before the committee of creditors of IECCL in November 2022 for their approval. Pursuant to negotiations and discussions between the Consortium and committee of creditors of IECCL, the bid was later revised vide letter dated July 21, 2023 issued by Almas on behalf of the Consortium Financial Proposal was placed before the committee of creditors of IECCL for their consideration, ....
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.... 10. Shri Ramji Srinivasan, Learned Senior Counsel for the Applicant contended that IA No.5036 of 2023 is still pending and much before filing the application, the Resolution Process of IECCL has proceeded and is on the final stage. Voting on the bid received from Howen International Fund SPC is in process which bid last date for voting is 30.09.2024. Submission is that in view of the fact that the process of IECCL has gone very far where completion which process started in the year 2021 with clear stipulation that the shares held by the IL&FS Group i.e. 42.25% was to be sold in the IECCL. The larger prayer in IA No.5036 of 2023 for writing down 100% shareholding of Category II companies without being applied on IECCL. It is submitted that all the stakeholders including the lenders and bidders are well aware that the process has been initiated for only for 42.25% shares held by IL&FS and IFIN in the IECCL, hence, no objection can be raised by the lenders at this stage. It is submitted that thus IECCL be excluded from the prayers made in IA No.5036 of 2023 for which Affidavit has already been filed by the IL&FS on 03.05.2024. It is submitted that the ICICI Bank which is member of ....
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....for an objector who has filed objection in IA No.5036 of 2023 in pursuance of the order dated 19.03.2024 passed by this Tribunal submits that he has also filed objection with regard to prayers made in IA No. 5036 of 2023. It is submitted that he has objection with regard to write down of 100% share capital of Howen International Fund SPC. He submits that he may be given opportunity to place his objection which has been filed in IA No.5036 of 2023 and prayers in IA No.5036 of 2023 be not considered as on date. 14. We have considered the submissions of the parties and perused the record. 15. As noted above, the prayers in IA No.5036 of 2023 are to permit the IL&FS to write down 100% shares of Category II Companies upon payment of the bid value/proceeds without the requirement of obtaining any further approvals from the shareholders of such Category II Companies. From the facts and sequences of the events as noticed above, it is clear that for the resolution of IECCL, steps were taken by the IL&FS from January 2021 for issuing an invitation for Expression of Interest dated 13.01.2021 which we have already extracted above. The invitation for Expression of Interest clearly mention....
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....ing payment towards New BGs i. Lump Sum Consideration to be used for distribution against crystalised outstanding liabilities existing as on the cut-off date 295 ii. Upfront payment for Invoked New BGs 102 iii. Taking over liability and obligation for the New BGs not invoked 130 iv. Less: BGs released subsequent to the submission of original bid 83 vi. Net Cash component to be paid upfront ((i) + (ii) + (iii) (iv) 444 B. Cash and other components (totalling Rs.363 Crores vii. Add: BG protection offered 300 viii. Share in Arbitration Award 36 ix. Conversion of part debt into equity* 27 x. Net Cash and other component to be paid eventually ((vii) +(viii) + (ix)) 363 xi. Total Bid value (as against the previous Bid Value of Rs.527.31 Crores ((vi) +(x)) 807 *The amount of Rs. 27 Crores represents the conversion value (of debt into equity) as long as the entire Rs. 400 crores are used for the Preferential Issue of shares. Number of shares issued would vary depending on the issue price." 17. As observed above, where the revised bid submitted by Howen International Fund SPC requires co....