NEW DELHI, July 7 (PTI): The National Company Law Appellate Tribunal (NCLAT) has directed IL&FS to distribute Rs 1,925 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).
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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 the Supreme Court. The total amount was Rs 2,407.40 crore.
In the order, NCLAT has directed IL&FS to pay Rs 1,925 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.
Subsequently, a debt due of Rs 797.52 crore was determined by CAG for RMGL and Rs 1,609.88 crore for RMGSL.
However, HMRTC (Haryana Mass Rapid Transport Corporation Ltd) objected to the audit report following which RMGL and RMGSL approached the Supreme Court in 2021.
The apex court directed HSVP/HMRTC to deposit Rs 638.01 crore in the escrow account of RMGL and Rs 1,287.90 crore for RMGSL.
On August 18, 2021, RMGL and RMGSL issued notices invoking arbitration as per the concession agreement. Following this, on September 15, 2021, HSVP and HMRTC also gave notice invoking the arbitration as per the concession agreement.
Regarding the arbitration, NCLAT said parties are free to agitate on all their issues regarding audit reports and other issues and due consideration should be given.
“Parties i.e. RMGL and RMGSL on one side and HSVP and HMRTC on other side are free to agitate all their issues regarding audit report and all other issues regarding the respective claims against each other in the arbitration proceeding,” the 26-page order passed by NCLAT said.
“It goes without saying that in the final resolution, due consideration shall be given to the arbitration award if any and provisions shall be made to ensure compliance of the award if any,” the order said.
