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2021 (2) TMI 468 - Tri - Companies LawSeeking approval of the proposal for settlement of the claims of Fagne Sonagarh Expressway Limited (FSEL) against the National Highways Authority of India (NHAI) and permit Fagne Sonagarh Expressway Limited and National Highways Authority Limited to execute a Settlement Agreement to record the proposal for termination and settlement of claims by Fagne Sonagarh Expressway Limited against National Highways Authority of India - HELD THAT - The Applicant in CA No. 1166 of 2020 was a subcontractor of the FSEL. The FSEL or its holding company ITNL owes certain amount to the Applicant for the civil works it had executed in the Project which has been classified as financial dues in the proposed Settlement Agreement. Therefore, the Applicant deserves to be admitted as intervenor in CA No. 1156 of 2020. Since the claim of the Applicant is admitted by FSEL the other prayers regarding implementation of Settlement Agreement and claim of dues would merge with the relevant prayers made in CA No. 1156 of 2020 concerning the Applicant-Intervenor. Besides, Hon ble Justice Mr. D. K. Jain (Retd.) has approved the claim and the proposed Settlement Agreement between the NHAI and FSEL. Provision in the proposed Settlement Agreement has also been made for payment of financial dues to FSEL subcontractors. The proposal for settlement of the claims of FSEL against NHAI and for implementation of Settlement Agreement and other consequential terms as approved by Hon ble Justice Mr. D. K. Jain (Retd.) needs to be ratified and recorded. Application allowed.
Issues Involved:
1. Supersession of IL&FS Board and appointment of new Board. 2. Resolution Framework for IL&FS Group. 3. Engagement of Hon'ble Justice Mr. D. K. Jain (Retd.) for supervising the Resolution Process. 4. Settlement of claims related to Fagne Songarh Expressway Limited (FSEL) against National Highways Authority of India (NHAI). 5. Intervention by GHV (India) Private Limited in the settlement process. Issue-wise Detailed Analysis: 1. Supersession of IL&FS Board and appointment of new Board: The Union of India filed CP No. 3638 of 2018 against Infrastructure Leasing and Financial Services Ltd (IL&FS) under Sections 241 and 242 of the Companies Act, 2013, alleging mismanagement. The Tribunal superseded the Board of Directors of IL&FS and constituted a new Board with six Directors to manage the company's affairs. This Tribunal further appointed additional directors and directed the new Board to furnish a roadmap for consideration. 2. Resolution Framework for IL&FS Group: The new Board prepared periodical progress reports and proposed a Resolution Framework, recommending various Resolution Processes for IL&FS and its group companies. The framework suggested an 'Asset Level Resolution' and, in some cases, the sale of a business vertical or winding up of certain entities. The Hon'ble NCLAT observed that the process should be similar to the 'Corporate Insolvency Resolution Process' and may require a Committee of Creditors (CoC). 3. Engagement of Hon'ble Justice Mr. D. K. Jain (Retd.) for supervising the Resolution Process: The Hon'ble NCLAT permitted the engagement of Hon'ble Justice Mr. D. K. Jain (Retd.) to supervise the Resolution Process. The resolution of Offshore IL&FS Entities was to be supervised by Justice Jain and presented to the Tribunal. The approval by this Tribunal would formalize and finalize the resolution of individual or collective group entities. 4. Settlement of claims related to Fagne Songarh Expressway Limited (FSEL) against National Highways Authority of India (NHAI): The applicant in CA 1156 of 2020 pleaded for the settlement of claims of FSEL against NHAI. The project faced financial issues, leading to suspension of work. The Ministry of Road Transport and Highways (MoRTH) issued guidelines for the resolution of stuck projects, allowing foreclosure and settlement based on the value of work done or 90% of 'Debt Due.' FSEL requested foreclosure and settlement based on the value of work done, which was assessed at INR 888.359 Crores. NHAI proposed a settlement amount of INR 707.709 Crores. The Standing Committee approved the settlement, and the amounts payable to FSEL Sub-Contractors were determined. The Tribunal approved the proposal for settlement and implementation of the Settlement Agreement. 5. Intervention by GHV (India) Private Limited in the settlement process: GHV (India) Private Limited, a subcontractor for FSEL, filed CA No. 1166 of 2020 to intervene in CA No. 1156 of 2020, supporting the settlement proposal. GHV faced financial difficulties due to outstanding dues from ITNL and FSEL. The Tribunal allowed GHV to intervene and impleaded it as a Party-Respondent in CA No. 1156 of 2020. The Tribunal approved the settlement proposal and directed that the settlement amount paid by NHAI to FSEL subcontractors be deposited into an Escrow Account, immune from any adjustment or set off against other dues. Conclusion: The Tribunal allowed the applications in CA Nos. 1156 and 1166 of 2020, approving the settlement of claims between FSEL and NHAI, and directed the implementation of the Settlement Agreement. The Tribunal ensured that the settlement amount be deposited into an Escrow Account and protected from any adjustments.
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