Infrastructure Leasing and Finance Services Limited Vs Union Of India

This Application is filed seeking approval of this Tribunal for the following reliefs:

A. Approve the proposal for amalgamation of IL&FS Asian Infrastructure Managers Limited and IIML Assets Advisors Limited with IL&FS Investment Managers Limited.

B. For any further reliefs as this Tribunal deems fit and proper in the facts and circumstances.

Facts leading to the present Application and Submissions advanced are as follow:

The present Application is filed seeking approval for the proposal of Amalgamation of IL&FS Asian Infrastructure Managers Limited (“IAIML”) and IIML Asset Advisors Limited (“IAAL”) with IL&FS Investment Managers Limited (“IIML”).

On 1 October 2018 this Tribunal suspended the erstwhile Board of the Applicant and appointed a new board comprising of six directors nominated by the Original Petitioner. Pursuant to appeals filed by the Applicant, the Hon’ble NCLAT vide Order dated 15 October 2018 inter alia stayed coercive creditor and other action against the Applicant Group in larger public interest.

At the outset, the Applicant has laid down the events which resulted in resolution of the Applicant group.

Eventually the Hon’ble NCLAT vide its Order dated 12 March 2020 permitted the resolution of the applicant to continue as per procedure suggested by the Original Petitioner which included a Resolution Framework. Thereafter, in compliance with the Hon’ble NCLAT Orders various progress reports were filed which inter alia sets outs resolutions framework of the Applicant group.

The Applicant submitted the Initial Resolution Framework and the First Addendum thereto to the Petitioner, which was further filed by the Petitioner before this Tribunal vide affidavit dated 15.01.2019 and before the Hon’ble NCLAT. Thereafter, the Applicant has also submitted the Second Addendum to the Petitioner. The initial Resolution Framework, the First Addendum and the Second Addendum are collectively referred to as the “Resolution Framework”.The Resolution Framework inter alia sets outs broad Resolution options for the resolution of the Applicant group.

The Applicant has filed the present Application pursuant to the Order dated 11.02.2019 passed by the Hon’ble NCLAT and the Order dated 12.03.2020 passed by the Hon’ble NCLAT for seeking approval of the proposed amalgamation of IAIML and IAAL with IIML.

IAIML and IAAL are both wholly owned subsidiaries of IIML. IIML is a listed company with its equity shares listed on Bombay Stock Exchange Limited (Code: 511208) and National Stock Exchange Limited (Symbol: IVC). The Applicant holds 50.42% stake in IIML, and rest is held by public.

IAIML and IAAL, both wholly owned subsidiaries of IIML are companies incorporated in India under the Companies Act, 1956 and are a part of 'List of "Green" - Indian IL&FS Group Entities' filed by the MCA with the Hon'ble NCLAT vide affidavit dated March 12, 2019. Further it is submitted that all the three companies namely, IIML, IAIML and IAAL are debt free as on March 31, 2022 with no outstanding liabilities.

The Hon'ble NCLAT vide order dated February 11, 2019, directed that the resolution of all the Green entities such as IAIML and IAAL shall be in accordance with the Resolution Framework subject to the supervision of Hon'ble Justice (Retd.) D.K. Jain, who was appointed to oversee the efforts of the New Board and approve resolution/restructuring proposals.

It is submitted that IAIML and IAAL are proposed to be amalgamated with IIML as a part of the resolution of IL&FS Group by and under Sections 230 to 232 of the Companies Act, 2013 and also applicable provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR").

The Applicant submits that at present there are no employees in IAIML and IAAL. All the assets and liabilities of IAIML and IAAL will be transferred to IIML post the merger of these entities. As IIML, IAIML and IAAL, are all engaged in the business of fund management and as a part of the consolidation strategy of IIML and its subsidiaries, the Board of IIML has proposed to merge IAIML and IAAL with IIML. Further, as there are no outstanding creditors in the books of IAIML, IAAL or IIML, the proposed merger is not resolution plan, but is in the ordinary course of organizational restructuring by consolidating similar businesses under different entities in one company for synergy and scale of operations. It is submitted that the amalgamation of IAIML and IAAL with IIML would result into consolidation of similar businesses, elimination of multiple entities, reducing the legal and regulatory compliances, reducing the time and efforts for consolidation of financials at group level, elimination of duplicative communication and coordination efforts and rationalization of administrative and compliance costs.

The Applicant submits that the merger of the two entities shall be by way of Scheme of Amalgamation in accordance with the provisions of section 230-232 of the Companies Act, 2013 and also based on the SEBI, LODR. The scheme is annexed as “Annexure 6” of the Application.

The IIML Board at its meeting held on February 14, 2022 after considering various restructuring proposals and on recommendation of the appointed auditor - Pricewaterhouse Coopers ("PWC") - approved, the merger of IAIML and IAAL with IIML. The IAIML and IAAL Boards have also accorded their respective approvals for the merger vide their corresponding resolutions both dated February 14, 2022.

The Board of IL&FS at its meeting held on 18.04.2022 has accorded its approval for the proposed amalgamation.

An application was made by the present Applicant on July 29, 2022 before Justice (Retd.) D. K. Jain seeking his approval for proposal of amalgamation of IAIML and IAAL, with IIML. Accordingly, Justice (Retd.) D. K. Jain gave his approval subject to the Applicant obtaining approvals of shareholders of IAIML and IAAL vide his letter dated August 2, 2022.

The Union of India has filed its affidavit in reply dated 09.05.2023 upon perusal of which it is observed that no objection has been raised by the Union of India for taking the matter on its merits without prejudice to the right of the original petitioner and SFIO.

Findings:

We have considered the matter on hand in the background of facts and circumstances stated above; it is observed that the amalgamation of IAIML and IAAL with IIML has also been approved by Justice D.K. Jain former judge of the Hon’ble Supreme Court appointed by the Hon’ble NCLAT to oversee the resolution process of the Applicant Group and to enable a resolution of the Applicant Group in line with the Resolution Framework; and the mandate given by this Tribunal to the New Board.

Moreover, it is observed that there are no creditors in the books of IAIML, IAAL and IIML and at present there are no employees with IAIML and IAAL. Since, all the entities are engaged in the business of fund management and as part of consolidation strategy the board of IIML has proposed the said merger. In addition to the above the said merger is approved by the New Board of IL&FS. Since, the above merger is finalized through a high powered committee constituted in pursuance of the orders of the Hon’ble NCLAT, monitored by Justice (Retd.) D.K. Jain of the Hon’ble Supreme Court, this Tribunal has very limited scope and jurisdiction to interfere in such commercial decisions as it would lead to reopening of the decisions of a high powered committee which will ultimately affect the speed recovery process in the larger interest of public.

Therefore, in the aforesaid backdrop, we approve the above proposal for amalgamation of IL&FS Asian Infrastructure Managers Limited and IIML Assets Advisors Limited with IL&FS Investment Managers Limited in the interest of justice.

We further direct, the Applicant to file appropriate Application for the proposed merger in terms of Section 230-232 of the Companies Act, 2013 and obtain approvals from shareholders of IAIML, IAAL and IIML.

In the aforesaid backdrop, CA No. 179 of 2023 in C.P No. 3638/MB/C-I/2018 stands disposed of as allowed in terms of prayer clause (A) hereinabove.