India Infrastructure Finance Company (UK) Limited (IIFCL UK), the overseas arm of Indian government-owned IIFCL, has moved the National Company Law Tribunal (NCLT) seeking initiation of insolvency proceedings against Mumbai Metro One Private Limited (MMOPL) over alleged dues of around ₹1,745 crore.
MMOPL is controlled by Anil Ambani-led Reliance Infrastructure.
IIFCL UK has filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) alleging default in repayment of an External Commercial Borrowing (ECB) facility.
A Bench comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar heard the matter on Wednesday.
The counsel for IIFCL told the tribunal that the total amount outstanding was around US$182 million or approximately ₹1,745 crore.
When the Bench subsequently sought a break-up of the claim, counsel said that the principal amount claimed was around US$56.35 million, apart from interest.
The date of default was stated as April 1, 2018.
IIFCL submitted that MMOPL's balance sheets contains acknowledgments of the debt and the date of default. It also placed on record NeSL Form C recording the default.
The NCLT, however, found several defects in the insolvency application and granted IIFCL UK seven days to rectify them.
One of the issues flagged by the Bench was limitation.
Since the default dates back to April 2018, the Bench asked IIFCL to demonstrate how its insolvency application remained within the limitation period.
IIFCL relied on subsequent acknowledgments in MMOPL's balance sheets and one-time settlement (OTS) proposals.
The counsel referred to an OTS proposal dated September 6, 2022 and submitted that MMOPL had acknowledged the liability in its balance sheets from year to year.
The Bench asked IIFCL to place on record a table showing how limitation had been extended from one acknowledgment to another.
The tribunal also found that the amount claimed by IIFCL included principal and interest that fell due during the period covered by Section 10A of the IBC.
Section 10A bars initiation of insolvency proceedings for defaults arising during the statutorily protected COVID-19 period.
The ECB facility extended to MMOPL was repayable in 60 unequal quarterly instalments.
When the Bench asked whether amounts falling due during the Section 10A period had been excluded from the insolvency claim, the counsel for IIFCL conceded that they had not been segregated.
“Amounts which have fallen due within the 10A period can never be claimed in an insolvency application,” the Bench observed.
The tribunal added that the application in its existing form could be rejected if the prohibited-period dues remain part of the claim.
Another defect concerned the currency in which the claim was stated.
The Bench noted that although the application disclosed the debt in US dollars, Form 1 requires the outstanding amount to also be expressed in Indian rupees.
The counsel conceded that the rupee figure has not been stated in the application and agreed to file an amended Form 1.
The tribunal further noted that while NeSL Form C was annexed to the application, NeSL Form D was not.
Accordingly, the Bench issued notice to IIFCL UK under the first proviso to Section 7(5) of the IBC and directed it to remove the defects within seven days. IIFCL was permitted to file an additional affidavit along with an amended Form 1.
The matter will next be heard on October 12.
During the hearing, the Bench also referred to earlier insolvency proceedings against MMOPL initiated by lenders including State Bank of India and IDBI Bank.
IIFCL said those proceedings were withdrawn after the lenders assigned their debt to the National Asset Reconstruction Company Limited (NARCL).
IIFCL UK maintained that its ECB exposure was separate.
It also said that although it had given an in-principle approval to an earlier restructuring proposal involving the joint lenders' forum, its board had never finally approved the restructuring.
The counsel further informed NCLT that around 10 percent of the dues were received in December 2022 but no further payment were made thereafter.
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