2019 (1) TMI 1914 - AT - Companies Law

Process similar to that of Corporate Insolvency Resolution Process for the purpose of proper resolution to be followed - requirement of constitution of CoC - HELD THAT - Such Committee of Creditors cannot be constituted and in the meantime, the Infrastructure Leasing and Financial Services Ltd. (ILFS) and its Board may be allowed to proceed with the matter. In such case, the parties are directed to address as to why this Appellate Tribunal will not direct that while matter to be supervised by a (Retired) Hon ble Supreme Court Judge. Pending arbitration proceedings - HELD THAT - If any pending before one or other Arbitral Tribunal in which the ILFS or any of its 348 Group Companies are parties, in such case, the Arbitral Tribunal may proceed with to determine the claim and counter claim, if any, made by the parties and may pass the award, and keep it in a seal cover. The Arbitral Tribunal are also prohibited to pass any order under Section 17 of the Arbitration Conciliation Act, 1996 against ILFS or any of its Group Companies. IFLS will provide the details of arbitral proceedings filed by it or by any of its Group Companies or filed against ILFS or any of its Group Companies by the next date - Post both the appeals on 28th January, 2019 at 2.00 p.m. when the main appeals are also likely to be listed.

Summary

Issues:
1. Constitution of a Committee of Creditors for resolution of Infrastructure Leasing and Financial Services Limited (ILFS) and its Group Companies.
2. Proceedings related to pending arbitration cases involving ILFS and its Group Companies.
3. Disclosure of details of arbitral proceedings by ILFS.

Analysis:
1. The judgment addresses the need to follow a process similar to the Corporate Insolvency Resolution Process for the resolution of ILFS and its Group Companies. It highlights the requirement of constituting a Committee of Creditors to assess the viability of plans or offers for acquisition. In the absence of a Resolution Professional, the judgment allows ILFS and its Board to proceed with the matter. The parties are directed to provide reasons why the supervision of the matter should not be assigned to a retired Supreme Court Judge.

2. Regarding pending arbitration proceedings involving ILFS and its Group Companies, the judgment instructs the Arbitral Tribunal to continue determining claims and counterclaims without passing any orders under Section 17 of the Arbitration & Conciliation Act, 1996. The award is to be kept in a sealed cover until the final decision of the petition under Sections 241 & 242 of the Companies Act, 2013 pending before the National Company Law Tribunal, Mumbai Bench. However, if the award favors ILFS or its Group Companies, it may not be kept in a sealed cover during the pendency of the Company Petition.

3. ILFS is directed to provide details of all arbitral proceedings initiated by or against it or any of its Group Companies by the next date. The judgment schedules both appeals for further proceedings on 28th January 2019, aligning with the listing of main appeals.