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2025 (1) TMI 834
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.... FS Mr. Awasthi, Advocate for IRP in IA No. 5300 / 2023 Mr. Krishnendu Dutta, Sr. Advocate with Mr. Palesh Taing , Advocates for SREI Infrastructure JUDGMENT ASHOK BHUSHAN , J. These two IAs (IA Nos.3169 & 5300 of 2023) have been filed by Infrastructure Leasing & Financial Services Ltd. ("IL&FS") praying for certain directions. We proceed to notice pleadings and prayers in both IAs. IA No.3169 of 2023 2. This Application has been filed by IL&FS seeking direction from the Tribunal to approve the decision of New Board to collapse/ unwind the transactions whereby IL&FS Financial Services Ltd. ("IFIN") has provided loans to third parties ("Third Party Borrowers"), which further lent such loan amounts to certain IL&FS group entities. In paragraph 1 of the Application, following has been stated: "1. The present Application is being filed on behalf of Infrastructure Leasing and Financial Services Limited ("IL&FS") seeking inter alia necessary directions from this Hon'ble Appellate Tribunal to approve the proposal of the New Board to collapse/unwind transactions whereby IL&FS Financial Services Limited ("IFIN") has provided loans to third parties ("Third Party....
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.... the IL&FS Group, the high level of debt that requires resolution and therefore the speed for execution required to ensure the Final Resolution is achieved. 7.3. The New Board continues its efforts in unravelling the intra-group borrowings and believes that large parts of the IL&FS Group were, in the past, operated as a single enterprise with no boundaries of legal entities and separate managements. This appears to be one of the key governance shortcomings that has led to a large contagion impact on creditors of the IL&FS Group. For instance, on a preliminary analysis of the financial statements and records of IFIN for the last 3 financial years, it is noticed that IFIN had outstanding loans and investments to companies in the IL&FS Group of Rs. 5,728 Crore, Rs. 5,127 Crore, and Rs. 5,490 Crore in FY16, FY17 and FY18 respectively. Prima facie these appear to be significantly in excess of permissible norms, in all of the 3 years. If this is applied for calculation of capital adequacy, IFIN would have significant negative capital adequacy in each of these 3 years. Further, we note from records available Interlocutory Application Nos.3169 & 5300 of 2023 in Company Appeal (AT)....
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....rrower and/or through its associate/ group company) Amount outstanding under the Final Loan as on October 15, 2018 (INR Cr) 1. IFIN Empower India Ltd. 178.25 Sikar Bikaner Highway Limited 29.91 2. IFIN Srinagar Sonmarg Tunnelway Limited 147.06 3 IFIN Avance Technologies Limited 155.88 Srinagar Sonmarg Tunnelway Limited 157.48 4. IFIN Beigh Constructions Co. Pvt. Ltd. 218.81 ITNL 216.98 5. IFIN Kalyan Sangam Infratech Ltd. 104.93 ITNL 260.66 6. IFIN Sangam Business Credit Ltd. 157.05 ITNL 7. IFIN /GHV Hotel (India) Private Limited 106.31 Srinagar Sonamarg Tunnelway Limited 108.99 8. IFIN Wavell Investment Private Limited 104.07 ITNL 104.85 9. IFIN Attivo Economic Zone (Mumbai) Pvt. Ltd. 115.33 ITNL 207.83 10. IFIN Sahaj E- Village Ltd. (now known as E-Village Kendra Ltd.) 93.77 11. IFIN Attivo Economic Zone (Mumbai) Pvt. Ltd. 203.39 Fagne Songadh Expressway Limited 208.01 12. IFIN Vistar Financers Pvt Ltd 163.40 ....
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....le in the IFIN books as on October 15, 2018, with the claim accepted by the Claims Management Authority i.e. Grant Thornton LLP from the respective Third Party Borrower against the relevant Final Borrower in respect of the Subject Transaction. This may result in IFIN either writing off or booking income depending on case to case basis. As part of the "Proposal to Unwind/Collapse the Subject Transactions with the Third Party Borrowers" IFIN reserves its right to recover such sums from the Third Party Borrowers which they may have received from the Final Borrower and/or retained as part of the routing transactions, but which were either not ultimately paid to IFIN (including but not limited to interest which may have been received) and/or may result in wrongful gains to the Third Party Borrower upon collapse of the Subject Transaction. STEP 2: MUTUAL DISCHARGE/ RELEASE OF CLAIMS IFIN, the Third Party Borrower as well as the Final Borrower will enter into the necessary documents enabling mutual discharge/ release of obligations arising out of the Subject Transactions STEP 3: INTIMATION TO THE CLAIMS MANAGEMENT AUTHORITY The Claims Management Authority will b....
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....ere issued in the Application. An Application - IA No.4953 of 2023 was filed by Srei Infrastructure Finance Limited ("SIFL") pleading that it has extended financial facilities to IL&FS entities and the different amounts are reflected as receivable from the IL&FS entities. The Applicant prays for impleadment in the Application and has pleaded that the Application be allowed and SIFL be impleaded as one of the Respondent. SIFL has filed reply to the Application - IA No.3169 of 2023, to which a rejoinder affidavit has also been filed and an additional affidavit has also been filed by SIFL. Reply has also been filed by Respondent Nos.2 (Empower India Ltd.) and 3 (Avance Technologies Ltd.) as well as Respondent No.11 (Bharat Road Networks Ltd.) IA No.5300 of 2023 9. This IA has been filed by IL&FS, praying for setting aside the order/ letter dated 12.09.2023 issued by IRP of Attivo Economic Zone (Mumbai) Pvt. Ltd. ("Attivo") rejecting the claim of the Applicant, which was already admitted in the Corporate Insolvency Resolution Process ("CIRP"). 10. The Applicant submits that the Applicant is a Financial Creditor of Attivo. On an Application filed by the Applicant, CIRP against ....
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....ransaction with Corporate Debtor was circuitous. In the reply, various pleadings and averments made in IA No.3169 of 2023 have been relied. 12. We have heard Shri Ramji Srinivasan, learned Senior Counsel appearing for the Applicant. We have also heard learned Counsel appearing for Respondent in IA No.3169 of 2023 and Bimal Kant Choudhury, IRP in IA No.5300 of 2023. 13. The background and reasons for filing IA No.3169 of 2023 has already been noticed above. In pursuance of Resolution passed by the New Board dated 30.50.2023, Applications have been filed. It is to be noted that in Company Appeal (AT) No.346 of 2018, we have already passed an order permitting collapse of various transactions, where Agreements was entered between IL&FS and third party borrowers. In the affidavit filed on behalf of the Applicant dated 07.08.2024, reference to order passed by this Tribunal on 19.07.2024 has been made, where with regard to certain third party borrowers, IL&FS was directed to be recognized as Lender. In IA No.3169 of 2023, in paragraph 14, under heading "Step 2" it is stated that the third party borrower as well as the final borrower will enter into the necessary documents enabling m....
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....he question of any circuitous transaction in respect of the amounts advanced by SIFL to IL&FS entities therefore cannot and does not arise. 17. Further as admitted by IL&FS, the Third-Party Borrowers had not lent any funds to the IL&FS entities and such funds were in fact advanced by SIFL. The same would also be evidenced from the balance sheets of Fagne, CNTL, GIMCO and SPPL for FY 2021-22. 18. Therefore, the proposal of IL&FS as submitted in paragraph 14 of IA 3169 seeking permission of this Hon'ble Tribunal for collapsing/unwinding of circuitous transactions of certain IL&FS entities ought not to be permitted in so far as Fagne, CNTL, GIMCO and SPPL are concerned." 14. With respect to paragraph-8 of the Application - IA No.3169 of 2023, where details of entities, third party borrowers given, it was reiterated by SIFL that to IL&FS entities namely - Fagne, GIMCO, SPPL and CNTL, money was advanced by SIFL and third party borrowers namely - Attivo Economic Zone (Mumbai) Pvt. Ltd.' Vistar Financers Pvt. Ltd.; Sahaj E-Village Ltd.; Bharat Road Network Ltd. and Giridhan Projects Pvt. Ltd. have not advanced any amount to IL&FS entities as alleged by the Applica....
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.... relevant to notice that in the Application, which was filed by IL&FS, in paragraph 19, following was pleaded: "19. It is clarified that the present application shall in no manner have a bearing on any investigations/proceedings that are being carried out with regard to whether the Subject Transactions were indeed fraudulent in nature or not. The rights/legal recourse/remedies available to IL&FS/IFIN with respect to the aforesaid are reserved, in the event the need so arises." 17. Proceedings are already pending with regard to several third party borrowers for example, Attivo, where Section 7 Application is admitted and proceedings are going on. The pleadings in paragraph 19, clearly mentions that IA No.3169 of 2023 in no manner to effect the proceedings or investigations being carried out with regard to subject transactions. We, thus, are of the view that as on date direction for collapsing the Agreement with regard to Respondent Nos.8 to 12 in the Application, cannot be issued. However, we make it clear that direction permitting collapsing of the Agreement, shall have no bearing or effect on any pending proceedings, including proceedings under Section 7, or any other ....
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.....2023, rejecting the claim of IFIN. The letter dated 17.08.2023 is filed as Annexure-7 to the IA, which is as follows: "To, August 17 2023 The Interim Resolution Professional/ Resolution Professional Mr. Bimal Kanti Chaudhary 77N50, Raja S.C.Mallick Road, 8 S.P.B Block Kolkata- 700092 Subject:_IL&FS Financial Services Ltd. v Attivo Economic Zone (Mumbai) Pvt. Ltd. C.P. (IB) 43/K.B/2022 Dear Sir, l. As you are aware, the Hon'ble National Company Law Tribunal, Kolkata Bench (Court I) vide order dated June 09, 2023 passed in IL&FS Financial Services Ltd. v Attivo Economic Zone (Mumbai) Pvt. Ltd. C.P. (IB) 43/KB/2022 ("Admission Order") has allowed the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2015 ("Section 7 Petition") on behalf of IL&FS Financial Services Limited ("IFIN"), whereby Corporate Insolvency Resolution Process for Attivo economic Zone (Mumbai) Pvt. Ltd. ("Corporate Debtor") has been initiated. It is pertinent to note that IFIN has the significant voting rights in the Committee of Creditors of the Corporate Debtor, with IFIN holding 39.14 %. ....
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.... Plot No.C-22, "G" Block Bandra Kurla Complex, Bandra East Mumbai-400051 Dear Sirs, I refer to the application to the Hon'ble NCLAT, New Delhi, being LA 3169 of 2023 filed by Infrastructure Leasing and Financial Services Limited (IL&FS) in Company Appeal (AT) No. 346 of 2018 in the matter of Union of India V s. Infrastructure Leasing and Financial Services Limited and Ors. seeking a relief to, inter alia, collapse certain transactions whereby IL&FS Financial Services Limited (IFIN) has provided loans to certain third parties, which include the transaction with Attivo Economic Zone (Mumbai) Private Limited (Attivo ). From your application and the correspondence I understand that in the event the NCLAT application is permitted, then it will result in IFIN's exposure to Attivo being changed to another IL&FS Group entity, with IFIN becoming the creditor of that particular entity instead of Attivo. It is learnt from the aforesaid application to NCLAT that loans to some IL&FS Group entities were given by routing the loans through their IL&FS Group entities/third parties reflecting adoption of circuitous transactions t....