NCLT Approves IL&FS One-Time Settlement with Siva Green, Ensures Stakeholder Interests

Mumbai Bench of NCLT sanctions the final settlement to resolve outstanding dues, while maintaining safeguards for ongoing investigations.

In a significant development, the Mumbai Bench of the National Company Law Tribunal (NCLT) has approved the Final One-Time Settlement (OTS) Proposal and Settlement Agreement between Infrastructure Leasing & Financial Services Limited (IL&FS) and Siva Green Power Projects India Private Limited. The approval marks a crucial step towards resolving IL&FS's outstanding dues while safeguarding stakeholders' interests and ensuring compliance with ongoing investigations.

IL&FS Financial Services Limited (IFIN), a subsidiary of IL&FS, has been actively formulating a standard framework for OTS proposals from third-party borrowers, aiming for value maximization for all stakeholders. The settlement agreement with Siva Green was approved by Hon'ble Justice (Retd.) D.K. Jain, and the NCLT's order allows for its implementation and consummation.

The tribunal's decision ensures that the settlement agreement aligns with public interest and maintains transparency, without prejudice to any ongoing investigations or legal proceedings. Notably, the tribunal emphasized that the approval does not exonerate Siva Group from any liabilities arising from fraudulent activities, as highlighted in the Serious Fraud Investigation Office (SFIO) report.

The settlement entails a comprehensive financial arrangement, including a cash component of INR 60 crores and the transfer of two bungalows, valued at INR 15 crores, to IFIN. Additionally, the tribunal has directed that the amounts received from the settlement be utilized as per the IL&FS Resolution Framework. The NCLT's order further stipulates that proceeds from the settlement will be maintained in a fixed deposit and distributed to creditors upon prior approval.

In a related matter, the tribunal addressed the impleadment of independent directors, Neera Saggi and Renu Challu, as parties in the ongoing case against IL&FS. Citing the absence of specific allegations or evidence of their active involvement in fraudulent activities, the NCLT denied the application for their impleadment, though it retained the right to reconsider if evidence emerges in future investigations.

The tribunal's decision underscores the importance of ensuring a resolution that protects stakeholders' interests while maintaining the integrity of ongoing legal proceedings. The approval is seen as a critical step towards resolving IL&FS's financial challenges and achieving a timely resolution for the company and its stakeholders.

Bottom Line:

Approval of Final One-Time Settlement (OTS) Proposal and Settlement Agreement for resolution of outstanding dues, while ensuring the rights and interests of stakeholders, without prejudice to ongoing investigations or legal proceedings.

Statutory provision(s): Companies Act, 2013 Sections 241, 242, National Company Law Tribunal Rules, 2016 Rule 11, Insolvency and Bankruptcy Code, 2016 Section 7

Infrastructure Leasing & Financial Services Limited v. Union of India, (NCLT)(Mumbai Bench) : Law Finder Doc Id # 2821791