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TMI Blog2022 (7) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... e for PTC India Financial Services Limited. ORDER ASHOK BHUSHAN, J. These Applications being interrelated have been heard together and are being disposed off by this common order. We may first notice the brief contents of the Applications and the prayers made therein. I.A. No. 59 of 2021 2. I.A. No. 59 of 2021 has been filed by ILFS Ltd. seeking approval of this Tribunal to allow restructuring proposal of IL&FS Tamil Nadu Power Company Ltd. (hereinafter referred to as 'ITPCL') in terms of the term sheet received from the Consortium of Banks which has been referred to as 'ITPCL Restructuring Plan'. The Applicant sought for implementing the Restructuring Plan for conversion of ITPCL from 'Amber' to 'Green'. The application placed that ITPCL Restructuring Plan has been prepared in accordance with Circular dated 07.06.2019 issued by the Reserve Bank of India (RBI) titled as 'Prudential Framework for Resolution of Stressed Assets'. In the Application, the Applicant has given brief history of the case beginning from filing of petition under Section 241-242 of Companies Act, 2013 by Union of India before the National Company Law Tribunal (NCLT), Mumbai Bench. The Board of Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan, direct that the said Restructuring Plan be binding on all stakeholders of Respondent No.2 (including Group, Operational and CAPEX Creditors) and that any claim, entitlement or contingent liability (disclosed or undisclosed) of any nature (statutory, contractual or otherwise), and whether existing at or relating to a period prior to the Cut-off date which is specifically not provided/contemplated in the ITPCL Restructuring Plan be extinguished immediately upon implementation of the ITPCL Restructuring Plan; d) Confirm termination of the Terminated Contracts and direct that any claim, entitlement, or contingent liability (disclosed or undisclosed) that may arise from Terminated Contracts/Under Scrutiny Transactions on account of termination of the respective contracts or which relate to period beyond the termination date or to the extent has not been provided under ITPCL Restructuring Plan shall stand extinguished; and e) Grant any further reliefs as this Hon'ble Tribunal deems fit and proper in the facts and circumstances." 3. This Tribunal vide order dated 01.12.2021 allowed prayers (a) and (b) of I.A. No. 59 of 2021. By a subsequent order dated 31.01.2022, while hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 and 30.05.2016, respectively. There have been deliberations between the parties for the outstanding amount held in the year 2018. Although a part of amount was paid, amount of USD 16,638,568 remained unpaid. The Applicant also filed an Intervention Application in the Company Appeal (AT) No. 346 of 2018 and 347 of 2018 in February, 2019. In furtherance of the public announcement dated 25.02.2019 published on the website of ITPCL, the claim was filed to the Claim Management Advisor namely 'Grant Thornton India LLP' admitted the claim of the SEPCO to the tune of INR 123,07,68,178/-. It is submitted that inspite of admitted claim of the SEPCO now by I.A. No. 59 of 2021 the ILFS on the plea of restructuring of debt of ITPCL is trying to extinguish the claim of SEPCO. The Applicant by the application has prayed for the following reliefs:- "a) Allow the Application and permit the Applicant to be impleaded in the present interlocutory application bearing I.A. No. 59 of 2021 read with Company Appeal (AT) No. 346/2018 pending before this Hon'ble Tribunal; b) Direct the Respondent to disclose/ produce the documents referred to and mentioned in para 28 the IA No.59 of 2021 including bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnton India LLP, Transaction Review Report dated June 30, 2020 and further grant liberty to the Applicant to file its detailed Affidavit in rebuttal to IA No. 59 of 2021. c) Reject the contradictory, inconsistent and illegal plea of the Respondent for extinguishment of the Applicant's admitted claims against the Respondent as sought by the Respondent vide its prayers c) and d) respectively, of the application i.e. I.A 59/2021; d) Any other/further Orders which this Hon'ble Tribunal may deem fit in the facts and circumstances of the present case." I.A. No. 543 of 2022 6. This Application has been filed by two Applicants namely (i) China Datang Technologies and Engineering Co. Ltd. (hereinafter referred to as 'CDTE') and (ii) Datang Technologies & Engineering India Pvt Ltd. (hereinafter referred to as 'DTEI'). By I.A. No. 543 of 2022, Applicants have prayed for impleadment in I.A. 59 of 2021. Alongwith filing I.A. 543 of 2022, an affidavit in reply has also been filed by both the above Operational Creditors. The case of the CDTE and DTEI as detailed in the reply is that CDTE is a company registered under the laws of Republic of China and DTEI is a subsidiary company of CDTE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y hypothecating all its current assets and immovable assets. In pursuance of the RBI Circular dated 07.06.2019, restructuring has been proposed of the ITPCL. Punjab National Bank supports the prayers made in the I.A. 59 of 2021. By this Application impleadment has been prayed for as well as implementing Restructuring Plan by allowing prayer (c) and (d) as made in I.A. 59 of 2021. 9. We have heard Shri Ramji Srinivasan, learned senior counsel appearing for the Applicant in I.A. No. 59 of 2021, Shri Atul Sharma, learned counsel appearing for China Datang Technologies and Engineering Co. Ltd. and Datang Technologies & Engineering India Pvt Ltd., Ms. Meenakshi Arora, Sr. Advocate appearing for SEPCO and Shandong. Shri Amit Anand Tiwari has also appeared for SEPCO. 10. Shri Ramji Srinivasan, learned senior counsel submits that the Restructuring Plan of the ITPCL has been prepared with the agreement of the lenders under which total outstanding liabilities of ITPCL are being dealt in a fair and reasonable manner. As per Techno Economic Viability Study, the debts have been classified into 'Sustainable Debt' and 'Unsustainable Debt'. It is submitted that the New Board had commissioned a F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which will lead to systematic pay out of dues. For the sustainable debt portion under the ITPCL Restructuring Plan, the Secured Consortium Lenders would be entitled to 59% recovery, the other Financial Creditors would be entitled to 30% recovery, and the Operational & Capex Creditors would be entitled to 15% recovery. This is in addition to the recovery that the said creditors would be entitled to under the unsustainable debt category. Shri Srinivasan submits that the Restructuring Plan has already been approved by allowing prayer (a) and (b) by order dated 01.12.2021; now prayer (c) and (d), as prayed in I.A. 59 of 2021, be also allowed to fully implement the Restructuring Plan. 13. Ms. Meenakshi Arora, learned senior counsel appearing for SEPCO and Shandong submits that Grant Thornton has already admitted all the outstanding dues of the SEPCO and Shandong which amount they are entitled to receive from ITPCL. It is submitted that the project of Unit-1 and Unit-2 has already been completed and both the units are generating power and ITPCL is receiving commercial benefits out of generation of power, however, SEPCO and Shandong, who has completed their part of contract, have not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 59 of 2021 a different amount has been mentioned against both the entities whereas amount admitted was different. 15. We have considered submissions of learned counsel for the parties and perused the record. 16. The main issue to be answered in these applications is as to whether prayer (c) and prayer (d) as made in Application I.A. No. 59 of 2021 deserves to be allowed or rejected. 17. The main case of ILFS in its application I.A. No. 59 of 2021 is that the Restructuring Plan which has been finalized with the consent of Lenders is in accordance with RBI Circular dated 07.06.2018. Copy of Circular dated 07.06.20198 has been brought on record as Annxure-4 to the I.A. No. 59 of 2021. Para 3 of the Circular deals with applicability. Para 3 is as follows:- "Applicability 3. The provisions of these directions shall apply to the following entities: (a) Scheduled Commercial Banks (excluding Regional Rural Banks); (b) All India Term Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI); (c) Small Finance Banks; and (d) Systemically Important Non-Deposit taking Non-Banking Financial Companies (NBFC-ND-SI) and Deposit taking Non-Banking Financial Companies (NBFC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnologies & Engineering India Pvt Ltd. 21. There is no dispute between the parties that in pursuance of the public notice issued by Claim Management Advisor - 'Grant Thornton', all the Objectors have filed their claim and the Claim Management Advisor after collating and verifying the claim has admitted the claims of Capex Creditors. The objectors have brought on record the updated list of creditors as on 31.12.2021 as Annexure - A6 to I.A. No. 516 of 2022. As per the admitted claim following is the admitted claims of the Objectors:- S. No. Name of Creditor Date of receipt Amount claimed Amount admitted Nature of claim 4. China Datang Technologies And Engineering Co. Ltd. 19 Jun 2019 1,587,633,494 1,587,633,494 Construction Service 7. Datang Technologies And Engineering India Pvt. Ltd. 19 Jun 2019 628,855,934 628,855,934 Construction Service 19. SEPCO III Electric Power Construction Co. Ltd. 17 Jun 2019 1,230,768,178 1,230,768,178 Supply of Goods 20. Shandong Tiejun Electric Power Engineering Company Limited 17 Jun 2019 2,693,455,673 2,693,455,673 Construction Service 21. Shandong Tiejun Electric Power Engineering Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication under Section 66 of the I&B Code before the Adjudicating Authority being CA No. 190 of 2022 dated 06.04.2022. It is for the Adjudicating Authority to consider the Section 66 application and pass appropriate order. However, the fact that Section 66 application is filed and pending consideration, on the basis of certain adverse observations against the Capex Creditors/ Operational Creditors, the outstanding amount which is admitted by the Claim Management Advisor cannot be withheld to be paid relying on any observation in the Forensic Audit Report or Transaction Review Report. The submission on which Shri Ramji Srinivasan, learned counsel for ILFS has placed much reliance is the proceeding initiated under the PMLA Act. It is submitted that the Investigating Officer issued email dated 22.09.2020, where it was mentioned that no kind of payment be made to SEPCO and Shandong. The email dated 22.09.2020 is as follows:- "From: "Rana Banerjee" To: "NK Balaji" , "n ramesh" , "Maharudra Wagle" Cc "Piyush Yadav" Date 09/22/2020 01 :48 PM Subject: Investigation under PMLA, 2002 against IL&FS and its other group companies- reg _________________________________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of shares of ITPCL equivalent to 8.86% shares of ITPCL, presently valued Rs.449,24,26,000 @ Rs.302.48, is the proceeds of crime which is in possession of M/s A. S. Coal Pte. ltd., Singapore. Therefore, in terms of Section 2(1)(u) of PMLA, 2002, the 14,851,486 numbers of shares of ITPCL equivalent to 8.86% shares of ITPCL, presently valued Rs. 449,24,26,000 @ Rs. 302.48 are liable for attachment, under Section 5(1) of The Act. 37. NOW THEREFORE in exercise of the powers conferred under sub-section (1) of the Section 5 of the Prevention of Money Laundering Act 2002(15 of 2013) read with Notification No.GSR.441(E), dated 1st July, 2005 and in terms of the authorization dated 07.02.2007, issued by the Director of Enforcement, Directorate of Enforcement, New Delhi read with Addendum No.DLA(A)/AUT/5:8(4)/03/2010 dated 12.10.2011, I hereby provisionally attach the moveable properties as 14,851,486 numbers of shares of ITPCL equivalent to 8.86% shares of ITPCL, presently valued Rs. 449,24,26,000 @ Rs. 302.48, for a period of 180 days (One Hundred and Eighty Days) and further order that the same shall not be transferred, disposed-off, alienated or parted with or otherwise dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,486 numbers of shares M/s A.S. Coal Pte., Singapore Rs. 449,24,26,000/- @ Rs. 302.48 28. From the Provisional Attachment Order as well as the Final Attachment Order dated 24.08.2021 it is clear that what is attached is shares of A S Coal Pte. Ltd. There is no other attachment of any assets of SEPCO or Shandong. 29. Now we revert back to the email dated 22.09.2020. This email has been issued by the Investigating Officer, where Freezing Order was passed with regard to amount payable to EPC Contractors. Section 17(1A) of the PMLA Act, 2002 empowers freezing of the property. Section 17 of the Act is relevant, which is to the following effect:- "17. Search and seizure( 1) Where the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person (i) has committed any act which constitutes moneylaundering, or (ii) (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to moneylaundering, or (iv) is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in subsection (1) shall be required for search under this subsection. (4) the authority seizing any record or property under subsection (1) or freezing any record or property under subsection (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under subsection (1A), before the Adjudicating Authority." 30. Section 17 provides for scheme for search and seizure. Sub-section (4) of Section 17 requires that authority seizing any record or property or freezing any record or property shall, within a period of thirty days from such seizure or freezing, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing, before the Adjudicating Authority. The present is the case where there is no material to indicate that any application under Section 17(4) was filed after the email dated 22.09.2020. In the application which has been filed by ILFS i.e. I.A. No. 59 of 2021 there is no mention of filing of any applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escription, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located." "Sec. 2(w) - "records" - include the records maintained in the form of books or stored in a computer or such other form as may be prescribed." 14. The respondent No.4 in the counter affidavit has stated that the action initiated against the appellant is based on the complaint dated 02.11.2019 made by the State Bank of India alleging that the appellant, its Chairman and the Promoter Directors have conspired and cheated them to tune of Rs. 354.32 crores by diversion of funds abroad. In that regard the CBI has registered the case in FIR No. RC 18(A)/2019 dated 04.11.2019 under Section 120(B) read with Section 420, 468 and 471 IPC and under Section 13(2) read with section 13(1)(d) of Prevention of Corruption Act, 1988. Since the said offences are also schedule offences under Section 2(1)(x) and (y) of PMLA, the case in ECIR BGZO/01/2020 was recorded by the Directorate on 02.01.2020 and action is taken to safeguard the alleged proceeds of crime. On that aspect we have already i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicates that instead prayer of extinguishment, now they pray that the payment will be made subject to any adverse finding in final pronouncement. 34. When the claims of Capex Creditors/ Operational Creditors has been admitted by the Claim Management Advisor, which is also admitted fact, the prayer of the ILFS for extinguishing the claim of the Capex Creditors and the Operational Creditors, is not acceptable. The admitted claim of Capex Creditors/ Operational Creditors has to be dealt with in the Resolution Plan when it will be drawn. As noted above, the claim of Operational Creditors/ Capex Creditors are sought to be dealt with in a plan of restructuring debt under Reserve Bank of India Circular dated 07.06.2019. For dealing with admitted debts of Operational Creditors/ Capex Creditors, an appropriate Resolution Plan has to be made for addressing the claims. The Restructuring Plan has been arrived between the lenders and the borrower i.e. ITPCL. The ITPCL, who was bound to consider the admitted claim of the Operational Creditors/ Capex Creditors, has to consider the claims appropriately and arrive at a fair and reasonable resolution of the claims. The claims of Capex Creditors/ O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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