IL&FS co: NCLAT directs NHAI not to terminate concession agreement
Tribunal said the resolution of BKEL, a SPV set up by IL&FS Transportation Networks Limited (ITNL), is in final stages and any termination at this stage would further complicate the process
New Delhi: The National Company Law Appellate Tribunal has directed the National Highways Authority of India (NHAI) not to terminate the concession agreement of an IL&FS group entity -- Baleshwar Kharagpur Expressway Ltd, and take appropriate measures for its insolvency resolution.
The appellate tribunal said the resolution of Baleshwar Kharagpur Expressway Ltd (BKEL), a SPV set up by IL&FS Transportation Networks Limited (ITNL), “is in final stages” and any termination at this stage would “further complicate” the process. “It is also relevant to notice that when Resolution of Respondent No 2 (BKEL) is at the final stages, there is no occasion for Respondent No 1 (NHAI) to proceed to terminate the concession agreement to further complicate the resolution of an entity,” said NCLAT. NCLAT observed that the insolvency resolution of BKEL, which is for the development of a road project in Baleshwar-Kharagpur Section of NH-60, is as per the framework approved by appellate tribunal for recovery of debts of crisis-hit IL&FS group and its entities. It further said when an entity is to be resolved as per the resolution framework, payments to all creditors/ claimants including the lenders have to be as per the resolution process. “We further direct that the applicant as well as respondents to take appropriate measures for final resolution of the entity, i.e. respondent No.2,” said NCLAT while disposing of the interim application moved by State Bank of India (SBI).
A concession agreement was signed on April 24, 2012 between NHAI and BKEL, in which it had availed financial facilities from the SBI. As per the concession agreement, BKEL was obliged to pay concession fees and premium to the NHAI. However, a deferment in payment of premium was granted by NHAI by entering into a supplementary agreement in 2016. However, in 2018, IL&FS crisis happened and in 2019, BKEL was categorised as ‘Red Entity’ of the IL&FS Group as per the roadmap approved by NCLAT. In the red list, those IL&FS group companies were listed which were not able to meet financial and operational obligations, including payment obligations to their creditors. Meanwhile, NHAI wrote several letters demanding repayment of premium dues, interest, default interest, penal interest, interest overdue etc, which was objected by SBI as it may derail the resolution process.
