2020 (9) TMI 521 - Tri - Companies Law

Sale of shares - approval of the sale - HELD THAT - The sale of education assets has been done within the Resolution Framework and the same is approved and recorded. Initiation of Bankruptcy Proceedings - HELD THAT - The initiation of bankruptcy proceedings is the best option in the given scenario. The same is recorded as prayed for. In the circumstances, the proposal of the Applicant for initiation of insolvency proceedings of IIDL and IIDMCC is taken on record - the request of the Applicant for exempting them from affixing the stamp on the affidavit and notarising the Application is also granted. Striking off the name from Register of Companies - Section 241-242 of the Companies Act, 2013 - HELD THAT - This Bench is of the view that the striking off of the company is the best option in the given scenario. Hence, we take on record the proposal as prayed for - The request of the Applicant for exempting them from affixing the stamp on the affidavit and notarising the Application is also granted.

Issues Involved:
1. Approval of the sale of shares and business undertakings.
2. Approval of acquisition of shareholding.
3. Implementation of Share Purchase Agreement and Business Transfer Agreements.
4. Appropriation and deposit of demand drafts towards consideration and resolution process costs.
5. Deferred consideration and upside amount provisions.
6. Exemption from affixing affidavit on stamp paper and notarizing the application.
7. Initiation of bankruptcy proceedings for offshore entities.
8. Striking off an offshore entity.

Issue-Wise Detailed Analysis:

1. Approval of the Sale of Shares and Business Undertakings:
The Applicant sought approval for the sale of shares of Schoolnet India Limited, held by Infrastructure Leasing & Financial Services Limited (IL&FS) and IL&FS Employee Welfare Trust (IEWT), to Falafal Technology Private Limited, free of all encumbrances, liens, and third-party claims. The sale was to be completed as per the terms of the Share Purchase Agreement (SPA) dated June 24, 2020. Additionally, the Applicant sought approval for the sale of business undertakings of IL&FS Cluster Development Initiative Limited (ICDI) and Skill Training Assessment Management Partners Limited (STAMP) on a slump sale basis, free of all encumbrances, for a lump sum consideration of INR 1 each, as per the respective Business Transfer Agreements (BTA) dated June 24, 2020.

2. Approval of Acquisition of Shareholding:
The Applicant requested approval for acquiring 100% of the shareholding of ICDI and STAMP held by Schoolnet India Limited, free of all encumbrances, as per the IL&FS SPA.

3. Implementation of Share Purchase Agreement and Business Transfer Agreements:
The Applicant sought permission to implement and give effect to the terms of the SPA, ICDI BTA, STAMP BTA, and IL&FS SPA, all dated June 24, 2020.

4. Appropriation and Deposit of Demand Drafts Towards Consideration and Resolution Process Costs:
The Applicant requested directions to appropriate and deposit the demand drafts submitted by Falafal Technology Private Limited towards the upfront consideration, ICDI H1 Bid amount, and STAMP H1 Bid amount into a designated escrow/bank account. The Applicant also sought permission to transfer INR 3,71,35,275 plus applicable taxes towards resolution process costs into a designated account and ensure that these funds are used exclusively for payment of resolution process costs.

5. Deferred Consideration and Upside Amount Provisions:
The Applicant sought directions regarding the deferred consideration of INR 6,29,47,786 in lieu of the subsidiary debt, to be paid to the Applicant and IEWT as per the SPA. The Applicant also requested that any upside amount received from LEHL, subject to LEHL realizing an amount in excess of INR 171,62,10,200 from the sale of 100% equity shares of Schoolnet, be deposited in the escrow/bank account and maintained as interest-bearing fixed deposits.

6. Exemption from Affixing Affidavit on Stamp Paper and Notarizing the Application:
The Applicant requested exemption from affixing the affidavit annexed to the application on stamp paper and notarizing the present application.

7. Initiation of Bankruptcy Proceedings for Offshore Entities:
The Applicant proposed to initiate bankruptcy proceedings for ITNL Infrastructure Developers LLC (IIDL) and ITNL International DMCC (IIDMCC) before the Dubai Courts under UAE Federal Decree-Law No. 9/2016 on Bankruptcy. These entities were "Offshore IL&FS entities" and the initiation of bankruptcy proceedings was considered the best option due to their inability to discharge liabilities and generate revenue.

8. Striking Off an Offshore Entity:
The Applicant proposed to initiate the process of striking off IIPL Laos Pte. Ltd. in accordance with the laws of Singapore. IIPL Laos was incorporated for a project in Laos, which did not materialize, and hence had no operations. The Board of Directors of ITNL, IIPL, and IIPL Laos consented to the striking off process, and the Hon’ble Justice (Retd.) D. K. Jain approved the proposal, subject to RBI approval for remittance of funds.

Conclusion:
The Tribunal approved the sale of education assets, acquisition of shareholding, and implementation of the SPA and BTAs. The requests for appropriation and deposit of demand drafts, deferred consideration, and upside amount provisions were granted. The exemptions from affixing the affidavit on stamp paper and notarizing the application were allowed. The proposals for initiating bankruptcy proceedings for IIDL and IIDMCC and striking off IIPL Laos were taken on record and approved.

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