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2025 Supreme(Online)(NCLT) 361
NATIONAL COMPANY LAW TRIBUNAL
Shri Prabhat Kumar, Shri V.G. Bisht, JJ
SREI Infrastructure Finance Limited – Appellant
Versus
Infrastructure Leasing and Financial Services Limited – Respondent
CP 3638 of 2018
For the Appellants/Petitioners: Mr. Ravi Kadam, Sr. Adv., Adv. Rohan Kadam, Adv. Vichare, i/b Adv. Abhishek
For the Respondents: Mr. Avinash Bisht, Adv. Drishti Das, Adv. Roma, i/b Adv. Amarchand Mangaldas
The court affirmed the limitations of jurisdiction under the IBC and the necessity for pending fraudulent transaction clarifications before directing any payment from the escrow account to the applicant.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - NCLT Rules, 2016 - Interlocutory application filed for compliance of order dated October 14, 2022, concerning distribution of Residual Settlement Amount to creditors - Applicant seeks an amount from IL&FS in compliance with the Tribunal’s prior order, contending improper withholding by Respondents. (Paras 1, 5.3)
(B) Fraudulent transactions - Allegations raised of loan transactions being fraudulent under Section 66 of the Code, with no clear adjudication by Claim Management Agency, leading Tribunal to hold amounts in escrow pending further orders. (Paras 3.12, 5.6)
(C) Jurisdictional issues - Court finds limitation under equitable jurisdiction in resolving the disputes under IBC vs. Companies Act. (Paras 3.9.2, 5.6)
Facts of the case:
Applicant seeks payment from Respondents alleging improper withholding of amounts determined as payable from a prior Tribunal order pertaining to the insolvency resolution process of related entities. Applicant claims amounts due but faced challenges in communication and action by IL&FS.
Findings of Court:
Amounts attributable to the Applicant held in escrow due to the pending adjudication of related applications. Recovery and distribution not warranted at present pending further clarifications under the IBC framework.
Issues: Whether the Tribunal should direct the payment of the contested amount amidst pending adjunction regarding fraudulent transactions.
Ratio Decidendi: The Tribunal finds no grounds to issue immediate directions for payment as claims remain subject to resolution under established frameworks, and no adjudicatory conclusions were made in prior proceedings.
Result: Application dismissed.
ORDER
1. This interlocutory application is filed by the Administrator of SREI Infrastructure Finance Limited (undergoing corporate insolvency resolution process in terms of Order dated 8.10.2021) (“Applicant”) under Section 60 (5) of the Insolvency and Bankruptcy Code (“Code”) read with Rules 11, 13 and 31 of NCLT Rules, 2016 seeking appropriate directions for compliance of this Tribunal’s order dated October 14, 2022 in Company Application No. 290 of 2021 in the captioned company petition. By the said order, this Tribunal had approved the distribution of Residual FSEL Settlement Amount amongst the creditors of Fagne Songadh Expressway Limited (“FSEL”), which is a wholly owned subsidiary of IL&FS Transportation Networks Limited (“ITNL”). The Applicant has sought direction to IL&FS to pay to SREI an amount of INR 208,01,04,367/- from the Residual FSEL Settlement Amount in compliance with the Order dated October 14, 2022 passed in Company Application No. 290 of 2021 in the present Company Petition forthwith. The Applicant has also sought interim relief to protect its interest.
2. The Applicant had sanctioned a loan of INR 200 crores to FSEL in terms of the sanction letter dated March 19,2018. Subsequently, Applicant and FSEL entered into a Rupee Term Loan Agreement dated March 29, 2018 containing the terms and conditions of the Loan, which inter alia provided that the loan shall be secured by a deed of hypothecation and such security was required to be created within a period of 180 days. Soon thereafter and prior to expiry of the 180 days’ period, this Tribunal vide order dated October 1, 2018 replaced the Board of IL&FS by new set of directors to resolve the insolvency of IL&FS and its group companies, including FSEL.
2.1. This Tribunal passed an order dated 14.10.2022 in Company Application No. 290 of 2021 in the captioned Company Petition inter alia approving the distribution of the Residual FSEL Settlement Amount to the creditors of FSEL whose claims had been admitted. Upon perusal of this order, the Administrator became aware of a settlement agreement dated February 19, 2021 between FSEL and NHAI, wherein NHAI agreed to pay FSEL a sum of INR 707,70,90,000/- ("FSEL Settlement Amount") for the foreclosure of the FSEL Project. After obtaining the necessary approvals, NHAI deposited the net settlement amount of INR 505,74,79,218/- in FSEL's escrow account. The Board of ITNL and the New Board approved the proposal for the distribution of the Residual FSEL Settlement Amount and initiation of the winding up of FSEL under Section 271(a) of the Companies Act, 2013 . This was approved by this Tribunal by its order dated October 14, 2022.
2.2. Further, the Applicant filed an application being I.A. No. 319 of 2023 in CP (IB) No. 294 (KB) of 2021, under Section 66 read with Section 60 (5) of the Code on February 4, 2023 inter alia impugning the loan transaction between SIFL and FSEL as "fraudulent" in terms of the Code. If successful in avoiding the Loan, FSEL would be required to return to SREI approximately INR 270.45 crores (along with further interest at 18% p.a from October 1, 2021 till the date of payment/realization).
2.3. It is case of the Applicant that, in any case, FSEL is liable to pay an amount of INR 208,01,04,367/- to SREI, being an admitted claim. However, attempts at effective communication with IL&FS Claims have been met with complete silence and disregard. Further, subject to the outcome of the Section 66 Proceedings, SREI is actually entitled to receive an amount INR 270.45 cr. (along with further interest at 18% p.a. from October 1, 2021 till the date of payment/realization). From any view of the matter, SREI would be entitled to at least an amount of INR 208,01,04,367/-from the Residual FSEL Settlement Amount.
3. Upon initiation of the resolution process for IL&FS Group entities in October, 2018 (including FSEL), SIFL has filed its claim relating to the SIFL Loan with the claims management advisor of the IL&F
