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TMI Blog2022 (7) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... Khurana, Applicant in I.A. No. 517 of 2022. Mr. Chetan Mittal, Sr. Advocate with Mr. Aabhas Kshetarpal, Mr. Rajesh Goel, Mr. Jatin Kumar, Mr. Udit Garg, Mr. Himanshu Gupta, Advocates for Applicants in I.A No. 1982 of 2021. Mr. Sanjay Shorey, Director Legal & Prosecution, MCA, Mr. Rakesh Tiwari (RD, Western Region) and Ms. Wamika Trehan (Intervenor for Aditya Birla Finance Limited) Advocates. Mr. Abhishek Mehta, Sr. Standing Counsel and Mr. Pratyakh Gupta, for IT Dept. in I.A. 557/2022. Mr. Aditya Sikka, Advocate for Union of India. For the Respondents : Mr. Ramji Srinivasan, Sr. Advocate with Mr. Kuber Dewan, Ms. Trisha Raychaudhuri, Ms. Rajshree Chaudhary, Advocates in I.A. Nos. 2966 of 2020, 2505 of 2021, 557, 645 of 2022. Mr. Ramji Srinivasan, Sr. Advocate with Mr. Raunak Dhillon, Mr. Abhijeet Das, Mr. Adarsh Saxena, Mr. Vikash Kumar Jha, Mr. Shubhankar Jain, Ms. Isha Malik, Mr. Nihaad Dewan, Mr. Ritu Vishwakarma, Ms. Drishti Das, Ms. Ananya Choudhury, Advocates. Mr. Abhirup Dasgupta, Mr. Ishaan Duggal, Ms. Bhawana Sharma, Advocates for Tata Power Consolidated Provident Fund and Pramerica Life Insurance. Mr. Sanjay Kapur, Ms. Megha Karnwal, Mr. Arjun Bhatia, Advocates for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity which undertake, fulfil and exercise the rights of the consortium under the letter of award. On 09th December, 2019, HSVP entered into a Concession Agreement with RMGL for execution of Project No. 1 for a period of 99 years. In the year 2012, HSVP issued another RFQ/RFP for developing a metro rail link from Delhi Metro Sikanderpur Station on MG Road to Sector 56, Gurugram (Project No. 2). On acceptance of bid submitted by consortium, consortium permitted and incorporated 'RMGSL' for the execution of Project No. 2. A Concession Agreement was entered into RMGSL and HSVP on 3rd January, 2013. RMGL completed Project No. 1 on 14th November, 2013. RMGSL completed Project No. 2 on 31st March, 2017. On 07th June, 2019, RMGL issued a notice of termination to HSVP seeking to bring an end to the Concession Agreement dated 09th December, 2009 in terms of Article 24.5.1 upon the expiry of 90 days. A similar termination notice was also issued by the RMGSL to HSVP in terms of Article 32.5.1 of Concession Agreement dated 03rd January, 2013. On 1st August, 2019, RMGL informed HSVP that it has completed the formalities for handover of Project No. 1 and that the Concession Agreement dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its report in sealed cover. The Sealed Cover was opened by the High Court and Report was taken on record. It was noticed that audit is limited to the examination of debt due as defined in Concession Agreement. With regard to RMGL, debt due was determined by the CAG as 797.52 Crore and debt due for RMGSL was determined as 1609.88 Crores and affidavit was filed before the High Court by HMRTC objecting to the Audit Report. CAG filed Affidavit in the High Court replying objections of HMRTC. High Court adjourned the hearing on 08th April, 2021. Special Leave Petition was filed by RMGL and RMGSL in the Hon'ble Supreme Court of India. Hon'ble Supreme Court of India issued notice on 05.02.2021 and permitted the Lenders to file response. Hon'ble Supreme Court after hearing all the parties disposed of Civil Appeal No. 925-926 of 2021, Rapid Metrorail Gurgaon Limited Etc. Vs. HMRTC and Ors. In pursuance of the Order of the Hon'ble Supreme Court HSVP/HMRTC deposited an amount of Rs. 638.01 Crore in Escrow Account of RMGL and an amount of Rs. 1287.90 in the Escrow Account of RMGSL. On 18th August, 2021, RMGL and RMGSL has issued notice invoking arbitration as per the Concession Agreement. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 982 of 2021, Reply-Affidavit has been filed by the RMGL and RMGSL. Objections have also been filed by the Canara Bank and Union Bank of India in I.A. No. 1982 of 2021. 8. I.A. No. 284 of 2022 has been filed by the Canara Bank, Lender of Consortium of RMGSL. In the Application, Canara Bank has prayed for following relief: "In view of the abovementioned facts and circumstances and in the interest of justice and equity, this Hon'ble Tribunal may be pleased to: a) Allow the present application of Canara Bank (lead bank) on behalf of the consortium lenders; and b) Allow the consortium lenders lead by Canara Bank to adjust Rs. 1287.90 Crores deposited by HSVP in the Escrow Account of RMGSL on 25.06.2021 in pursuance of the Supreme Court's Order and Judgment dated 26.03.2021 towards recovering the dues of the RMGSL, one of the subsidiary of the IL&FS; and c) Pass any other such order as this Hon'ble Appellate Authority may deem fit in the intent of justice, equity and good conscience." 9. In I.A. No. 284 of 2022, Reply-Affidavit has been filed by RMGSL and HMRTC and HSVP. Rejoinder has also been filed by the Canara Bank. 10. We have heard Mr. Dhruv Mehta, Learned Sr. Counsel ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving details of the transfer of assets and the documents. HSVP has unduly withheld final certificates which is required to be handed over. It is submitted that CAG report has been upheld by the Hon'ble Supreme Court and as per the Judgment of the Hon'ble Supreme Court, any party aggrieved with CAG Report is free to raise issues in the Arbitration. Mr. Bajaj, appearing for Canara Bank has also adopted the submissions of Mr. Dhruv Mehta and submits that prayer made in the Application I.A. No.284 of 2022 be allowed. 14. We have considered the submissions of Learned Counsel for the parties and perused the record. 15. As noted above, in the Civil Appeal filed by RMGL and RMGSL against the Order of Punjab and Haryana High Court, all the parties were heard by detailed elaborate Judgment dated 26TH March, 2021, all contentions of the parties have been noted and decided. Hon'ble Supreme Court has in its Judgment held that CAG was to determine the debt due and once the debt due determined, 80% of debt due was required to be deposited by HSVP and for rest of the dispute including the dispute regarding Audit Report is to be raised before the Arbitration Proceeding. In this reference, para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and their impact on the debt due; (iv) Verification that all non-fare revenues were duly accounted and that all fare revenues were deposited in the Escrow Account; (v) Verification that the amounts standing to the credit in the Escrow Account had been appropriated in the order prescribed in the Escrow Agreement; (vi) Verification that all other receipts and payments were routed through the Escrow Account, together with the review of all other bank accounts maintained/operated by the appellants; and (vii) Information in the annual reports of the appellants was arrived at by following the applicable standards and guidelines." 16. The Hon'ble Supreme Court after noticing the various Articles of the Concession Agreement held that after deposit of 80% in the Escrow Account by HSVP, if any dispute arising out of the audit report, the same would have to be resolved in Arbitration. In paragraph 51, following has been held: "51 This provision, which is embodied in clause (v) of the operative directions of the High Court's consent order dated 20 September 2019, is capable of a reasonable interpretation that once a determination was made in the audit report, 80 per cent would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, RMGL and RMGSL shall execute and handover to HSVP all documents which are required for effectuating the transfer of operations, maintenance and assets to HSVP or their nominees with a view to fulfill the obligation of the concessionaires in Article 25 of the Concession Agreement dated 9 December 2009 and clause (vi) contained in the order of the High Court dated 20 September 2019, as modified on 4 October 2019 and 15 October 2019; and (vi) The writ petitions filed before the High Court by the respondents shall stand disposed of." 18. The Directions passed by the Hon'ble Supreme Court on 26th March, 2021 deciding the Civil Appeal are binding between the parties. Objections regarding Audit Report which are sought to be raised before us by Mr. Chetan Mittal has already been dealt by the Hon'ble Supreme Court and the same cannot be allowed to be agitated in this Appeal. Hon'ble Supreme Court has clearly held that all issues pertaining to objections to Audit Report can be raised in the Arbitration Proceeding. We may also notice the submissions of Mr. Chetan Mittal regarding non-compliance of various articles of the Concession Agreement so as to disentitle RMGL and RMGSL from clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of Shree Mittal that assets had not been handed over hence RMGL and RMGSL has not complied with the terms of the Concession Agreement, does not commend us. In any view of the matter the deposit of 80% of debt due by the HSVP and HMRTC are under the Judgment of the Hon'ble Supreme Court and that cannot be undone by the any submissions made on behalf of HSVP and HMRTC. All other issues have been left to the parties to agitate in the Arbitration Proceeding which is a mechanism provided in the Concession Agreement to resolve the dispute between the parties. Determination of Debt Due for the purpose of deposit of 80% debt due by HSVP has become final and cannot be allowed to be questioned in these applications. In the present case only concern is the distribution of amount 80% debt due as deposited by HSVP in the Escrow Account of RMGL and RMGSL. The Lenders in their applications have prayed that they be permitted to appropriate the entire 80% deposited towards their debt liabilities as per financing document. Mr. Ramji Srinivasan, Learned Sr. Counsel appearing for ILFS submits that 80% amount deposited has to be in accordance with the 'Revised Distribution Framework' as ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concession Agreements are duly enforced, the structure of financing for infrastructure projects may well be in jeopardy. Such a consequence must be avoided by declining to accede to a request, such as that by HMRTC and HSVP, which is to allow it to resile from its obligations. These obligations arise not only in terms of the Concession Agreements, but have been solemnly assumed before the High Court. Hence, on both counts, HMRTC and HSVP cannot be permitted to resile." 20. We are thus of the view that all the investigations and enforcement machinery has to follow to its logical conclusion but the deposit of only 80% debt due have been directed by the Hon'ble Supreme Court. As observed above all issues between the parties has to be sort out by the Arbitration as noticed above both RMGL/RMGSL and HSVP/HMRTC have invoked the Arbitration clause in the Concession Agreement and has given notice to each other which proceeding may take its logical conclusion and the distribution of the 80% debt due is in terms of the Concession Agreement has to be subject to final resolution. We may further notice the Judgment of this Tribunal dated 12th March, 2020 passed in Company Appeal (AT) No. 346 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India and the procedure as suggested by it for the purpose of completing resolution process." 21. We thus are of the view that distribution of 80% of debt due deposited in the escrow account of RMGL and RMGSL has to be in accordance with the Direction of this Tribunal dated 12th March, 2020 in paragraph 64 to 66 as notice above. 80% of debt due as determined by CAG is laying in the Escrow Account of RMGL and RMGSL. We permit the interim distribution of the said amount on pro rata distribution as suggested by Union of India and approved by this Tribunal in Paragraph 66 of the Judgment dated 12th March, 2020. We are of the view that Interim Distribution of the amount shall be amongst the Financial Creditors of both the Project No. 1 and 2. The Interim Distribution shall abide by the final resolution of ILFS Companies after following due procedure as prescribed in 'Revised Distribution Framework'. In result, we dispose of all these three applications with following directions: a) The Distribution of 80% debt due deposited in the Escrow Account of RMGL and RMGSL shall take place in accordance with the 'Revised Resolution Framework' approved by this Tribunal vide Order dated 12th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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