NCLAT directs IL&FS to distribute Rs1,925 cr to financial creditors
The order pertaining to payments received in connection with Gurgaon metro project
image for illustrative purpose
Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited received Rs638.01 cr and Rs1,287.90 cr, respectively, as interim termination payments in their escrow accounts from HSVP, following an order of Supreme Court
New Delhi: The National Company Law Appellate Tribunal (NCLAT) has directed IL&FS to distribute Rs1,925 crore to its financial creditors from the payments received in connection with the Gurgaon metro project.
The Appellate Tribunal also made it clear that the distribution of the amount to the lenders will also be subject to the final resolution of the IL&FS companies concerned. The amount is part of the termination compensation received from two IL&FS subsidiaries and Special Purpose Vehicles (SPVs) -- Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL) -- from Haryana Shehari Vikas Pradhikaran (HSVP). The three entities and Haryana Mass Rapid Transport Corporation Ltd were part of the concession agreement for the Gurgaon metro project but the agreement was later terminated due to differences between IL&FS subsidiaries and the two Haryana government entities. Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited received Rs 638.01 crore and Rs 1,287.90 crore, respectively, as interim termination payments in their escrow accounts from HSVP, following an order of Supreme Court. The total amount was Rs2,407.40 crore. In the order, NCLAT has directed IL&FS to pay Rs1,925 crore, which is 80 per cent of the amount received from HSVP as interim termination payments to the financial creditors as per the interim distribution framework.
A three-member NCLAT Bench has passed the order on pleas by Canara Bank and Union Bank of India filed on behalf of IL&FS' consortium of lenders.
"The distribution of 80 per cent debt due deposited in the escrow accounts of RMGL and RMGSL shall take place in accordance with the 'Revised Resolution Framework' approved by this tribunal vide order dated March 12, 2020," NCLAT said.
The distribution of the said amount would be on pro-rata basis as suggested by the government and approved by NCLAT earlier. However, NCLAT said the distribution of 80 per cent debt due "shall be subject to final resolution of the concerned IL&FS companies".
"In distribution, an undertaking shall be taken from the financial creditors to refund any amount received by them in excess of their entitlement as found in final resolution of the IL&FS companies," NCLAT said. RMGL has developed Metrorail Link from Delhi Metro's Sikanderpur Station to NH-8 and RMGSL for MG Road to Sector 56, Gurugram.
After the project was completed, IL&FS SPVs and HSVP terminated their concession agreement due to several differences. RMGL and RMGSL demanded termination payments as per the clauses of the agreement. Later, Justice D K Jain, who has been appointed to supervise the resolution process of the debt-ridden IL&FS, directed both the companies in September 2019 to handover the project to HSVP. However, the termination was challenged by HSVP before the Punjab and Haryana High Court on September 6, 2019. The high court asked the Comptroller and Auditor General of India to arrange a team of auditors for the financial audit of the debt due and also for examining the scope of the audit of debt due.
