SC rejects IL&FS plea against distribution of group co's funds to lenders
This story was originally published at 19:48 IST on 4 November 2024
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NEW DELHI – The Supreme Court on Monday rejected a plea by Infrastructure Leasing and Financial Services Ltd. against the order of the National Company Law Appellate Tribunal approving the interim distribution of funds of its group company to lenders. The appellate tribunal had on Sept. 19 allowed a petition by the State Bank of India and directed interim distribution of 75% of the amount in the escrow account of Baleshwar Kharagpur Expressway Ltd. to lenders. Baleshwar Kharagpur is an arm of IL&FS Transportation Networks Ltd.
Baleshwar Kharagpur Expressway entered into a concession agreement with the National Highways Authority of India in 2012 for the Baleshwar Kharagpur Project on NH60 in Odisha and West Bengal. Baleshwar Kharagpur Expressway continues to operate the project and earns an annual toll revenue of INR 1.09 billion.
The concession agreement provides for payment of a premium to the National Highways Authority every month. As part of the concession agreement, an escrow agreement was executed between Baleshwar Kharagpur and the National Highways Authority, under which, a waterfall mechanism was to be followed for amounts credited in the escrow account.
Baleshwar Kharagpur issued letters to SBI and requested it to release payments to the National Highways Authority on priority. However, SBI refused to release the amount and said that as per the payment waterfall under the escrow agreement, the National Highways Authority's premium was lower in priority than debt service payments. The appellate tribunal ruled in favour of the bank.
On Monday, the shares of SBI ended 1.1% higher at INR 829.85 rupees on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Saji George Titus
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