NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) No. 346 of 2018 & I.A. No.1139 of 2019

IN THE MATTER OF:

Union of India ...Appellant

Vs.

Infrastructure Leasing & Financial Services Ltd. & Ors. ....Respondents

Present: Mr. Kapil Sibal, Senior Advocate, Mr. Abhinav Vashisht,

Senior Advocate, Ms. Arun Kathapalia, Senior Advocate, Mr. Manmeet Singh, Mr. Anukrit Gupta, Mr. Abhinandan Banerjee and Ms. Ria Kohli, Advocates for Intervenors.

Mr. Krishnendu Datta, Ms. Madhusneta, Ms. Kanika

Tandon and Ms. Shivangi Khurana, Advocates for NHAI – Applicant.

Mr. Gopal Jain, Senior Advocate, Mr. Ramesh Babu, Ms.

Manish Singh and Ms. Swati Setia, Advocates for Reserve

Bank of India.

Mr. Gopal Jain, Sr. Advocate with Mr. Ashish Mukhi, Ms.

Madhurima Sarangi, Mr. Kamlendra P. Singh, Advocates

for UTI AMC, UTI RSL, UTI MF, HDFC PF, Kotak PF, SBI

PF, LIC PF.

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth Sethi and Ms. Tanya Tiwari, Advocates for PTC India Financial Services – Intervenor.

Mr. Ajay Bhargava, Ms. Vanita Bhargava, Mr. Aseem

Chaturvedi, Ms. Wamika Trehan, Advocates for Mashreq Bank, Aditya Birla Finance Ltd., Apollo Munich, West Coast Paper Mills Ltd., HUL Union Fund, MC Rubel India

Ltd.

Mr. R.B. Trivedi, Advocate for BOI (Respondent No.15)

Mr. Singh, for Citizen Credit Co-operative Bank.

2

Mr. Ashish Prasad and Sanyam Saxena, for Appolo Tyres; Hindalco Employees Provident Fund; Hindalco

Employee Fund-II; Naysara Energies Employee Fund and ICBC.

Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms. Sweta, Advocates for Mother Dairy Fruit & Vegetable Pvt.

Ltd.

Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms.

Sweta, Advocates for NDDB PF Trust

Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms. Sweta, Advocates for BHEL PF Trust.

Mr. Abhinav Goyal and Mr. Pallav Mongia, Advocates for Yokogawa India Ltd. Employees Provident Fund and BALCO Employees Provident Fund, Intervenors.

Mr. Rohit Gandhi, Mr. Bindu, Mr. Aprajita Swarup and

Mr. Dhruv, Advocates for ITGI Employee Provident Fund Trust – for Appellant.

Mr. Bindu, Mr. Rohit Sondhi, Mr. Aprajita Swarup and Mr. Dhruv, Advocates for IFFCO-Tokio General Insurance

Co. Ltd. – Appellant.

Mr. Nishant Menon, Mrs. Kavita Sarin, Mr. Shafiq

Ahmed, Advocates for Intervener in IA 1251 & 1257 Ravi Kirishan Chandre for Applicant.

Mr. Piyush Bansal and Mr. Gurcharan Singh Advocate

for Interpleaders (1) HPGCPL – Employees Pension Fund

Trust (2) HVPNL – Employees Pension Fund Trust (3)

UBHVNL – Employees Pension Fund Trust (4) HVPNL –

Employees Provident Fund Trust and (5) UBHVNL –

Employees Provident Fund Trust.

Mr. Gucharan Singh, Advocate for Interpleader (1) Dalal

& Broacha Stock Broking Pvt. Ltd. and Mudra

Communication Pvt. Ltd. – Employees Pension Fund

Trust.

Dr. Abhishek Manu Singhvi, Senior Advocate with Mr.

Diwakar Maheshwari, Mr. Avishkar Singhvi, Mr. Shreyas

Edupuganti and Mr. Ashwij Ramaiah, Advocates for

Indus Ind Bank, Respondent 16.

3

Mr. Kailash Vasdev, Senior Advocate with Mr. Diwakar

Maheshwari and Mr. Shreyas Edupuganti, Advocates for

Asian Paints Factory PF Trust, Asian Paints Office PF

Trust, Asian paints Gratuity Trust and Asian Paints SAF

Trust, Intervenors.

Mr. Diwakar Maheshwari and Mr. Shreyas Edupuganti,

Advocates for Himami Ltd. Staff Provident Institution,

Bajaj Finance Ltd., CESC Limited Provident Fund and

CESC Ltd. - Intervenors.

Ms. Priyambada Mishra and Ms. Shweta Duggal,

Advocates for Food Corporation of India.

Ms. P.S. Chandralekha and Mr. P.I. Jose, Advocates for

Bassein Catholic Cooperative Bank, I.A. No.422/2019.

Mr. Ashish Rana and Mr. Anurag Kr. Singh, Advocates

for Intervenor (Exim Bank).

Mr. Krishna Dev J. and Mr. Rana Sandeep Advocates for

Ray Constructions, Intervenor.

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth

Sethi and Ms. Tanya Tiwari, Advocates for (PFS).

Mr. Dheeraj Nair and Mr. Kumar Kislay, Advocates for

Intervenor – EDC, Kotak Trust Invesco Trust.

Ms. Priyanka, Advocate for Adizath Industries (QC).

Mr. Arun Mani, Ms. Anannya Ghosh, Mr. Abhinav

Raghuvanshi and Ms. Gaurika Mohan, Advocates for

Intervenors.

Ms. Mallika Prabhakar for Sanjay Bajaj for Karnataka

Bank (Intervenor).

Ms. Mallika Prabhakar for Sanjay Bajaj for Punjab &

Sind Bank (Intervenor).

Mr. Vardhman Kaushik and Mr. Sangkrito Chauhan,

Advocates for Intervenor, Tata Motors Fin. Ltd.

4

Mr. Avijit Dikshit, Advocate for Powergrid EPF Trust, Powergrid EGF Trust, Powergrid Employees Defined

Contribution Superannuation Benefit (Pension) Scheme. Ms. Monika Benjamin, Advocate for Boxco Far East Pvt.

Ltd.

Mr. Himanshu Gupta, Advocate for DIAL Employees PF

Trust.

Mr. Shashwat Bhardwaj, Advocate on behalf of Ms. Anjali

Sharma, Advocate for Applicants – SAIL; Indian Iron &

Steel Co. Ltd. Provident Fund; Board of Trustees,

Hindustan Steel PF; Hindustan Steel Bhilai Project PF;

Hindustan Steel Ltd., Central Purchase Organisation

Calcutta PF; Durgapur Steel Plant PF Trust; SAI RMD

Establishment and Administrative Offices Employees PF;

SAIL Alloy Steel Plants PF Trust; Bokaro Steel Employee

PF; and Hindustan Steel Ltd. Contributory PF, Rourkela.

Mr. Vikas Kumar, Mr. Manish Paliwal, Mr. Ashutosh K.

Sharma, Advocates (Corporate Legal Partners) for BEL.

IPS Oberoi Aditi Sharma, Advocate for Mazagon Dock

Limited Operatives, Rashtriya Chemicals & Fertilizers

Ltd. and India Factoring Financial Solutions.

Mr. Arjun Harkauli, Mr. Anshuman Gargesh and Ms.

Arunima Bishnoi, Advocates for Crompton Greaves PF

No.1 (Intervenor).

Mr. L.K. Bhushan and Ms. Aditi Awasty, M/s Dua Associates, Advocates for Mccann Ericksion (Intervenor).

Mr. Chitranshul Sinha, Advocate for Deutsche Bank.

Mr. Gollamudi Sri Harsha Datta and Ashish Virmani Advocates for EGIS.

Mr. Anupam Kumar, Advocate for The Press Trust of India.

Mr. Parth Chopra, Advocate for Respondent Nos.4, 5, 6, 7 and 8.

5

Mr. Amit Agrawal, Ms. Aanchal Tikmani and Mr. Sahil Raveen, Advocates for Army Group Insurance Fund

(Intervenor) Diary No.11382/19.

Mr. Manih Dogra, Ms. Sonali Jaitely Bakshi and Mr.

Sharad Sharma, Advocates for Shapoorji Pallonji Pvt. Ltd. (Intervenor).

Mr. Sumit Arora Advocate for Navodyay Vidalyay Samiti (Intervenor)

Mr. Abhirup Dasgupta, Mr. Ishaan Duggal, Advocates for DHFL Prameria Ltd. (Intervenor)

Mr. Abhirup Dasgupta, Mr. Ishaan Duggal, Advocates Provident Fund (Intervenor).

Mr. Mohammad and Mr. Brijesh Ujjainnwal, Advocates for Infosys Ltd. Employee Provident Fund Trust.

Mr. Vishnu Sharma, Mr. Sourav Roy and Mr. Ashutosh Kumar, Advocates for Noida Authority (Impleadment party).

Mr. T. Sunder Ramanathan and Ms. Prerana De,

Advocates for HPCL Pension Fund Trust & BPCL Pension Fund Trust.

Mr. Amit S. Chadha, Senior Advocate with Mr. Shivek Trehana, Mr. Mehul M. Gupta and Mr. Pranay Mohan Govil, Advocates for Maharashtra Metro Rail Corporation

I.A. No.2077 and 2076.

Mr. Sanjeev Singh and Mr. Prashant Tripathi, Advocates for Aditya Birla Finance Ltd.

Mr. Gaurav Kejriwal and Mr. Sujit Keshri, Advocates for Bharatiya Reserve Bank Note Mudran Pvt. Ltd.

Mr. Vikram Hegde, Advocate for IREDA

Mr. R. Sudhinder, Ms. Nimita Kaul and Ms. Amrita Sarkar for Superannuation Fund of Housing Development, Finance Corporation Ltd., Housing

Development Finance Corporation Ltd., Provident Fund, Gratuity Fund of Housing Development Finance

Corporation Ltd., Gruh Finance Ltd., Employees Gratuity Trust Fund, Gruh Finance Ltd., Officer’s superannuation Fund, Gruh Finance Ltd. Employee’s Provident Fund

Trust.

6

Mr. Rahul Kripalani, Advocate for Countdown Financial

Services Ltd.

Mr. Sunil Fernandes, Mr. Karan Nagrath, Mr. Siddharth

Sharma, Ms. Anju Thomas and Mr. Darpan Sachdeva, Advocates.

Mr. Sidhanatha Barua, Advocate

Mr. T.P. Sindhu and Mr. Lakshman.RS and Mr. Mukund P.Unny, Advocates

Mr. Abhishek Gupta, Mr. Harshil Gupta, Advocates for

NALCO Employees Provident Fund Trust.

Mr. Anil Kher, Sr. Advocate with Ms. Disha Bajaj,

Advocate for Everest

Mr. Satendra K. Rai, Advocate

Mr. Sanjay Kapur, Ms. Meghna Karnwal, Mr. Bharath

Ganga Dharan and Mr. Kauser Husain, Advocates for SBI.

Mr. Atul Nigam, Mr. Nishant Nigam and Mr. Anubhav Tyagi, Advocates for Arvind Ltd.

Mr. Manoj, Advocate for FCI

Mr. Avneesh Garg and Mr. M.T. Reddy, Advocates for Hindustan Aeronatics Ltd.

Mr. Rudreshwar Singh and Mr. Gautam Singh, Advocates for First Rand Bank

Mr. Rudreshwar Singh and Mr. Gautam Singh,

Advocates for Punj Lyodd Ltd.

Mr. Rudreshwar Singh and Mr. Gautam Singh,

Advocates for Punj Loyodd Employees Provides Ltd.

Mr. Gautam Singh, Advocate for Arun Enterprises

Ms. Priya Sharma, Advocate for Vijya Bank

Mr. Gautam Singh and Ms. Priyanka Das, Advocates for Assam Tea Employees

7

Mr. Parag Maini, Mr. Abhimanyu Chopra, Mr. Raghav

Chadha and Mr. Parth Chopra, Advocates for South Indian Bank

Mr. Saransh Jain and Mr. Madhavam Sharma, Advocates for Jupiter Capital

Ms. Sriparna Dutta, Advocate for Titan Industries

Mr. R.B. Trivedi, Advocate for BOI

Mr. Yojit Mehra and Mr. Ajitesh Soni, Advocates for Maihar Cement, 63 Moons and SBI.

Mr. Krishna Dev J. and Mr. Rana Sandeep, Advocates for Ray Construction.

Mr. Rajgopal and Mr. Jasdeep S. Dhillon, Advocates for Skylark Infra and Sammon Infra

Mr. Anshuman Gupta, Mr. Syed Asalam Abib and Mr. Prateek Khaitan, Advocates for Jammu & Kashmir

Bank.

Mr. Abhirup Das Gupta and Mr. Ishaan Duggal, Advocates for DHFL Pramerica and Tata Power Consolidated PF.

Mr. Alok Dhir, Mr. Kunal Godhwari and Ms. Varsha Banerjee, Advocates for Punjab National Bank.

Ms. Jayashree S. Dasgupta and Ms. Saloni Chowdhri,

Advocates for Wavell Investment Pvt. Ltd.

Mr. Mohit Singh, Advocate for ICICI Bank

Mr. Rajiv Dutta, Sr. Advocate and Ms. Kanika Singhal,

Advocates for Axis Bank

Ms. Garima Jain and Mr. Balaji Srinivasan, Advocates for SIDCO Employees PF Trust.

Ms. Samridhi Hota, Advocate for J.K Paper Employees PF and J.K. Ltd. officers superannuation scheme, PF of

Tinplate Company of India Ltd., Tinplate Company Executive Staff, Superannuation Fund Limited Gratuity Fund., Tata Teleservices Ltd. Provident Fund Trust., Tata

Steel Limited Gratuity Fund, Provident Fund of TSL, Tata

8

Steel Limited Employees Pension Scheme, Tata Elxci India Employees Provident Find, Mutual Fund AMC.

Ms. Anushka Sharda Ms. Diviaana harg Advocate for Zyan Industries Ltd. and PPL Employees Provident Fund

Trust.

Mr. Ramji Srinivasan, Senior Advocate with Ms. Gauri Rasgotra, Mr. L. Vishwanathan, Mr. Raunak Dhillon, Mr. Vikash Kumar Jha, Mr. Karan Khanna, Mr. Aditya

Sikka, Ms. Ananya Dhar Chodhury and Mr. Hariharan for Cyril Amarchand Mangaldas.

Mr. Sanjay Shorey, Director, Legal Prosecution MCA

Mr. Sanjay Bhatt, Advocate for IDBI Trusteeship Mr. Brijesh Kumar Tamber, Mr. Vinay Singh Bist, Mr.

Pawan Kumar and Ms. Deepika Singh, Advocates for Allahabad Bank and Indian Bank

Mr. Ankit Vijaywargiya and Mr. Shrey Patnaik, Advocates for IRCON Medical Trust and IRCON ERF Trust.

Mr. Aditya Verma and Mr. Shrey Patnaik, Advocates for

Coastal Marine Construction & Engineering Ltd. Mr. Muthuvel Palani M., Advocate for Loyal Textile Mills

Ltd., Employees Provident Fund and Valli Cotton Traders Ltd., Employees Gratuity Fund.

Mr. Anand Shankar Jha, Mr. Arpit Gupta and Md. Ali, Advocates for Mahindra and Mahindra Ltd., Mahindra

and Mahindra Staff Provident Fund and MCC India Employees Provident Fund Trust.

Mr. Kamal Kant Jha, Mr. Prabhakar Thakur and Ms. Kriti Kumari, Advocates

Ms. Anushree Kapadia and Ms. Kavita Bhardwaj, Advocates

Mr. Anil Kaushik, Mr. Abhishek Mishra and Mr. Akash Bhardwaj, Advocates for EIL

Mr. Ankur S. Kulkarni and Ms. Richa Bhardwaj,

Advocates for Sun Iron Steel & Co.

Mr. Abhishek Anand, Mr. Anant A. Pavgi and Ms.

Chetna Singh, Advocates

9

Mr. Tushar Tyagi, Advocate for Shree Gautam

Construction Pvt. Ltd. Mr. Rajnish Sinha and Ms. Shreya Kohli, Advocates for

ENSO Infrastructure Pvt. Ltd.

Mr. Rajiv S. Roy, Mr. Avrojyoti Chatterjee, Mr. Abhijit Roy

and Ms. Jayasree Saha, Advocates for Canara Bank &

UCO Bank.

Mr. Ashish Rana and Mr. Anurag Kr. Singh, Advocates for Exim Bank

Mr. Kailash Pandey and Mr. Ranjeet Singh, Advocates for

Garhwal Mandal Awas Vikas Parishad Ms. Aishwarya Ramakrishnan, Advocates for Philips

Electronics India Ltd. Management Staff Provident Fund Trust.

Mr. Amit Tyagi and Mr. Haridutt Kr. Mishra, Advocates for TLG India Pvt. Ltd. Employees Provident Fund and

Sapient Consulting Employees Provident Fund Trust.

Mr. Debarshi Bhuyan, Advocate for Godrej Consumer

Products Ltd. Provident Fund

Ms. Richa Sandilya, Advocate for Indian Overseas Bank Ms. Risha Mittal, Mr. Karan Mehra and Ms. Simran

Mehrotra, Advocates for SAS Employees Provident Fund Trust.

Mr. B. Banerjee, Advocate

Mr. Arun Kathpalia, Sr. Advocate with Mr. Pramaya Goyal, Mr. Dharav Shah and Mr. Chiranjivi Sharma, Advocates for HDFC Mutual Fund.

With

Company Appeal (AT) No. 347 of 2018 IN THE MATTER OF:

Infrastructure Leasing and

Financial Services Ltd. ...Appellant

Vs.

10

Union of India & Ors. ...Respondents

Present: Mr. Ramji Srinivasan, Senior Advocate with Ms. Gauri

Rasgotra, Mr. L. Vishwanathan, Mr. Raunak Dhillon, Mr. Vikash Kumar Jha, Mr. Karan Khanna, Mr. Aditya

Sikka, Ms. Ananya Dhar Chodhury and Mr. Hariharan for Cyril Amarchand Mangaldas.

Mr. Krishnendu Datta, Ms. Madhusneta, Ms. Kanika Tandon and Ms. Shivangi Khurana, Advocates for NHAI –

Applicant. Mr. Abhishek Kumar and Ms. Arvshi Gupta, Advocates

for R-14 (PFC) and PFC EPF, PFC EGF and PFC SMF.

Mr. Gopal Jain, Senior Advocate, Mr. Ramesh Babu, Ms.

Manish Singh and Ms. Swati Setia, Advocates for Reserve

Bank of India.

Mr. Gopal Jain, Sr. Advocate with Mr. Ashish Mukhi, Ms.

Madhurima Sarangi, Mr. Kamlendra P. Singh, Advocates

for UTI AMC, UTI RSL, UTI MF, HDFC PF, Kotak PF, SBI

PF, LIC PF.

Mr. Gopal Jain, Sr. Advocate with Mr. Ashish Mukhi, and

Mr. Kamlendra Singh, Advocates UTI Mutual Fund.

Mr. Ashish Mukhi, and Mr. Kamlendra Singh, Advocates

for Hindustan Zinc Ltd.

Mr. Debal K. Banerjee, Sr. Advocate with Mr. Pankaj

Vivek, Advocate for Respondent No.13 – Bank of Baroda.

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth

Sethi and Ms. Tanya Tiwari, Advocates for PTC India Financial Services – Intervenor.

Mr. Ajay Bhargava, Ms. Vanita Bhargava, Mr. Aseem Chaturvedi, Ms. Wamika Trehan, Advocates for Mashreq

Bank, Aditya Birla Finance Ltd., Apollo Munich, West Coast Paper Mills Ltd., HUL Union Fund, MC Rubel India Ltd.

Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms.

Sweta, Advocates for Mother Dairy Fruit & Vegetable Pvt.

Ltd.

11

Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms.

Sweta, Advocates for NDDB PF Trust Mr. Atul Shanker Mathur, Ms. Priya Singh and Ms.

Sweta, Advocates for BHEL PF Trust.

Mr. Piyush Bansal and Mr. Gurcharan Singh Advocate

for Interpleaders (1) HPGCPL – Employees Pension Fund

Trust (2) HVPNL – Employees Pension Fund Trust (3)

UBHVNL – Employees Pension Fund Trust (4) HVPNL –

Employees Provident Fund Trust and (5) UBHVNL –

Employees Provident Fund Trust.

Mr. Gucharan Singh, Advocate for Interpleader (1) Dalal

& Broacha Stock Broking Pvt. Ltd. and Mudra

Communication Pvt. Ltd. – Employees Pension Fund

Trust.

Mr. Krishna Dev J. and Mr. Rana Sandeep Advocates for

Ray Constructions, Intervenor.

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth

Sethi and Ms. Tanya Tiwari, Advocates for (PFS).

Mr. Dheeraj Nair and Mr. Kumar Kislay, Advocates for

Intervenor – EDC, Kotak Trust Invesco Trust.

Mr. Aakash Sirohi and Mr. Indralal, Advocates for M/s

Shakti Traders (Diary No.9649/19)

Ms. Mallika Prabhakar for Sanjay Bajaj for Karnataka

Bank (Intervenor).

Ms. Mallika Prabhakar for Sanjay Bajaj for Punjab & Sind Bank (Intervenor).

Mr. Adarsh Tripathi and Mr. Anish Gupta, Advocates for

NTPC Limited Employees Provident Fund Trust.

Mr. Vikas Kumar, Mr. Manish Paliwal, Mr. Ashutosh K.

Sharma, Advocates (Corporate Legal Partners) for BEL.

Mr. Gollamudi Sri Harsha Datta and Ashish Virmani, Advocates for EGIS.

12

Mr. Amit Agrawal, Ms. Aanchal Tikmani and Mr. Sahil

Raveen, Advocates for Army Group Insurance Fund (Intervenor) Diary No.11382/19.

Mr. Manih Dogra, Ms. Sonali Jaitely Bakshi and Mr. Sharad Sharma, Advocates for Shapoorji Pallonji Pvt.

Ltd. (Intervenor). Mr. Vishnu Sharma, Mr. Sourav Roy and Mr. Ashutosh

Kumar, Advocates for Noida Authority (Impleadment party)

Mr. Abhijeet Sinha and Mr. Arijit Mazumdar and Mr. Shambo Nandy, Advocates for SREI Infrastructures

Finance Ltd.

Mr. R. Sudhinder, Ms. Nimita Kaul and Ms. Amrita

Sarkar for Superannuation Fund of Housing Development, Finance Corporation Ltd., Housing

Development Finance Corporation Ltd., Provident Fund, Gratuity Fund of Housing Development Finance Corporation Ltd., Gruh Finance Ltd., Employees Gratuity

Trust Fund, Gruh Finance Ltd., Officer’s superannuation Fund, Gruh Finance Ltd. Employee’s Provident Fund

Trust.

Mr. Sunil Fernandes, Mr. Karan Nagrath, Mr. Siddharth Sharma, Ms. Anju Thomas and Mr. Darpan Sachdeva, Advocates.

Mr. Sidhanatha Barua, Advocate

Mr. T.P. Sindhu and Mr. Lakshman.RS and Mr. Mukund P.Unny, Advocates

Mr. Sanjay Kapur, Ms. Meghna Karnwal, Mr. Bharath

Ganga Dharan and Mr. Kauser Husain, Advocates for SBI.

Mr. R.B. Trivedi, Advocate for BOI Mr. Yojit Mehra and Mr. Ajitesh Soni, Advocates for

Maihar Cement, 63 Moons and SBI.

Mr. Krishna Dev J. and Mr. Rana Sandeep, Advocates for Ray Construction.

13

Mr. Rajgopal and Mr. Jasdeep S. Dhillon, Advocates for Skylark Infra and Sammon Infra

Mr. Anshuman Gupta, Mr. Syed Asalam Abib and Mr. Prateek Khaitan, Advocates for Jammu & Kashmir

Bank.

Mr. Abhirup Das Gupta and Mr. Ishaan Duggal, Advocates for DHFL Pramerica and Tata Power Consolidated PF.

Mr. Amish Tandon, Mr. Sameer Abhyankar, Mr. Ayush

Beotra and Ms. Priyanka Arora, Advocates. Mr. Alok Dhir, Mr. Kunal Godhwari and Ms. Varsha

Banerjee, Advocates for Punjab National Bank. Ms. Jayashree S. Dasgupta and Ms. Saloni Chowdhri,

Advocates for Wavell Investment Pvt. Ltd.

Ms. Anushka Sharta Ms. Diviaana Garg, Advocate for Zyan Industries Ltd. and PPL Employees Provident Fund Trust.

Mr. Sanjay Shorey, Director, Legal Prosecution MCA for

R-1. Mr. Anuj Aggarwal, Advocate for Kudremuka Iron Ore

Company

Mr. Ankit Vijaywargiya and Mr. Shrey Patnaik, Advocates for IRCON Medical Trust and IRCON ERF Trust.

Mr. Aditya Verma and Mr. Shrey Patnaik, Advocates for Coastal Marine Construction & Engineering Ltd.

Mr. Anil Kaushik, Mr. Abhishek Mishra and Mr. Akash

Bhardwaj, Advocates for EIL Mr. Abhishek Anand, Mr. Anant A. Pavgi and Ms.

Chetna Singh, Advocates Mr. Tushar Tyagi, Advocate for Shree Gautam

Construction Pvt. Ltd.

Mr. Rajiv S. Roy, Mr. Avrojyoti Chatterjee, Mr. Abhijit Roy

and Ms. Jayasree Saha, Advocates for Canara Bank &

UCO Bank

14

Mr. Amit Tyagi and Mr. Haridutt Kr. Mishra, Advocates for TLG India Pvt. Ltd. Employees Provident Fund and

Sapient Consulting Employees Provident Fund Trust. Mr. Arun Kathpalia, Sr. Advocate with Mr. Pramaya

Goyal, Mr. Dharav Shah and Mr. Chiranjivi Sharma, Advocates for HDFC Mutual Fund.

With

Company Appeal (AT) No. 422 of 2018

IN THE MATTER OF:

S. Rengarajan ....Appellant

Vs. Union of India, Ministry of Corporate Affairs. ….Respondent

Present: Ms. Mallika Prabhakar for Sanjay Bajaj for Karnataka Bank (Intervenor).

Ms. Mallika Prabhakar for Sanjay Bajaj for Punjab &

Sind Bank (Intervenor).

Mr. Gopal Jain, Senior Advocate, Mr. Ramesh Babu, Ms.

Manish Singh and Ms. Swati Setia for Reserve Bank of India.

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth Sethi and Ms. Tanya Tiwari, Advocates for PTC India

Financial Services – Intervenor. Mr. Gollamudi Sri Harsha Datta and Ashish Virmani,

Advocates for EGIS.

Mr. Amit Agrawal, Ms. Aanchal Tikmani and Mr. Sahil

Raveen, Advocates for Army Group Insurance Fund (Intervenor) Diary No.11382/19.

Mr. Manih Dogra, Ms. Sonali Jaitely Bakshi and Mr. Sharad Sharma, Advocates for Shapoorji Pallonji Pvt.

Ltd. (Intervenor).

Ms. Anushka Sharta Ms. Diviaana harg Advocate for Zyan Industries Ltd. and PPL Employees Provident Fund Trust.

15

Mr. Ankit Vijaywargiya and Mr. Shrey Patnaik, Advocates

for IRCON Medical Trust and IRCON ERF Trust.

Mr. Aditya Verma and Mr. Shrey Patnaik, Advocates for

Coastal Marine Construction & Engineering Ltd.

Mr. Arun Kathpalia, Sr. Advocate with Mr. Pramaya Goyal, Mr. Dharav Shah and Mr. Chiranjivi Sharma, Advocates for HDFC Mutual Fund.

With Company Appeal (AT) No. 24 of 2019

IN THE MATTER OF:

Arun Kumar Saha ...Appellant

Vs.

Union of India, Ministry of Corporate Affairs ...Respondent

Present: Ms. Mallika Prabhakar for Sanjay Bajaj for Karnataka

Bank (Intervenor).

Ms. Mallika Prabhakar for Sanjay Bajaj for Punjab & Sind Bank (Intervenor).

Mr. Arun Kathpalia, Senior Advocate with Mr. Sidharth Sethi and Ms. Tanya Tiwari, Advocates for PTC India Financial Services – Intervenor.

Mr. Gollamudi Sri Harsha Datta and Ashish Virmani, Advocates for EGIS.

Mr. Amit Agrawal, Ms. Aanchal Tikmani and Mr. Sahil Raveen, Advocates for Army Group Insurance Fund

(Intervenor) Diary No.11382/19.

Mr. Manih Dogra, Ms. Sonali Jaitely Bakshi and Mr. Sharad Sharma, Advocates for Shapoorji Pallonji Pvt.

Ltd. (Intervenor).

16

Ms. Anushka Sharta Ms. Diviaana harg Advocate for Zyan Industries Ltd. and PPL Employees Provident Fund

Trust.

Mr. Aditya Verma and Mr. Shrey Patnaik, Advocates for Coastal Marine Construction & Engineering Ltd.

Mr. Ankit Vijaywargiya and Mr. Shrey Patnaik, Advocates for IRCON Medical Trust and IRCON ERF Trust.

Mr. Arun Kathpalia, Sr. Advocate with Mr. Pramaya

Goyal, Mr. Dharav Shah and Mr. Chiranjivi Sharma, Advocates for HDFC Mutual Fund.

O R D E R

SUDHANSU JYOTI MUKHOPADHAYA, J.

The ‘Union of India’ has filed an application under Sections 241 and

242 of the Companies Act, 2013, in public interest, alleging ‘oppression and

mismanagement’ of ‘Infrastructure Leasing and Financial Services Limited’

(“IL&FS” for short) and its Group Companies. In the said case, the National

Company Law Tribunal (“Tribunal” for short) passed an interim order by

changing the management of ‘IL&FS’, but rejected the application filed by

the ‘Union of India’ praying therein to pass order of ‘Moratorium’.

2. The order of rejection dated 12th October, 2018, rejecting the prayer

for ‘Moratorium’ has been challenged in the appeals preferred by the ‘Union

of India’ and ‘IL&FS’.

3. On 15th October, 2018, this Appellate Tribunal framed the following

questions of law and passed interim order:

17

“3. The questions arise for consideration in these

appeals are:

(i) Whether the Tribunal can pass

appropriate order under Section 241 read with

Section 242 of the Companies Act, 2013 for

resolution of the problems faced by the

Company in a time-bound manner for

maximisation of value of assets of the

Company, to promote entrepreneurship,

availability of credit and balance the interests

of all the stakeholders, and in case of failure

of resolution pass appropriate order of

liquidation; and

(ii) Whether the Tribunal in exercise of

powers conferred Under Section 242 (1) (b)

read with Section 242 (2)(m) and Section

242(4) of the Companies Act, 2013 read with

Rule 11 of the National Company Law

Tribunal Rules, 2016, can pass appropriate

interim order similar to order under Section 14

of the Insolvency and Bankruptcy Code, 2016.

4. According to Mr. Tushar Mehta, Learned

Solicitor General for the Appellant- ‘Union of India’

and Mr. Ramji Srinivasan, Learned Senior Counsel for

the ‘IL&FS’, the Tribunal has much wider power

under Sections 241 and 242 of the Companies Act,

2013 than the powers vested under provisions of

Insolvency and Bankruptcy Code, 2016.

5. Taking into consideration the nature of the

case, we are of the view that five largest creditors

should be also impleaded as party Respondents to

these appeals in the representative capacity of the

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Creditors. Learned counsel for the Appellant(s) will

make necessary correction in the cause title and other

pages of the appeals in course of the day. Defects, if

pointed out by office, may be removed before the next

date.

6. Issue notice on Respondents, including newly

impleaded Respondents by speed post. Requisite

along with process fee, if not filed, be filed in course

of the day. If the Appellant(s) provides the e-mail

address of Respondents, let notice be also issued

through e-mail. Dasti service is permitted particularly

in the newly impleaded Respondents.

Post these appeals ‘for admission’ on 13th

November, 2018 on the top of the list.

Taking into consideration the nature of the

case, larger public interest and economy of the nation

and interest of the Company and 348 group

companies, there shall be stay of

(i) The institution or continuation of suits or

any other proceedings by any party or

person or Bank or Company, etc. against

‘IL&FS’ and its 348 group companies in any

Court of Law/Tribunal/Arbitration Panel or

Arbitration Authority; and

(ii) Any action by any party or person or Bank

or Company, etc. to foreclose, recover or

enforce any security interest created over

the assets of ‘IL&FS’ and its 348 group

companies including any action under the

Securitization and Reconstruction of

Financial Assets and Enforcement of

Security Interest Act, 2002;

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(iii) The acceleration, premature withdrawal or

other withdrawal, invocation of any term

loan, corporate loan, bridge loan,

commercial paper, debentures, fixed

deposits, guarantees, letter of support,

commitment or comfort and other financial

facilities or obligations vailed by ‘IL&FS’

and its 348 group companies whether in

respect of the principal or interest or hedge

liability or any other amount contained

therein.

(iv) Suspension of temporarily the acceleration

of any term loan, corporate loan, bridge

loan, commercial paper, debentures, fixed

deposits and any other financial facility by

the ‘IL&FS’ and its 348 group companies by

any party or person or Bank or Company,

etc. as of the date of first default.

(v) Any and all banks, financial institutions

from exercising the right to set off or lien

against any amounts lying with any

creditor against any dues whether principal

or interest or otherwise against the balance

lying in any bank accounts and deposits,

whether current or savings or otherwise of

the ‘IL&FS’ and its 348 group companies.

The interim order will continue until further

orders and not be applicable to any petition under

Article 226 of the Constitution of India before any

Hon’ble High Court or under any jurisdiction of the

Hon’ble Supreme Court.”

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4. These appeals were subsequently admitted and from time to time

orders have been passed by this Appellate Tribunal. Out of 348 Group

Companies of ‘IL&FS’, 178 ‘Offshore Group Companies’ have been released.

As regards ‘Green Entities’, the order of ‘Moratorium’ has been lifted. There

are about 13 ‘Amber Entities’ whose matters are pending consideration.

5. When it was brought to the notice of this Appellate Tribunal that a

number of Banks were declaring the loan accounts of ‘IL&FS Group

Companies’ as ‘Non-Performing Assets’ (“NPA” for short) in view of the

interim order as noted above, on 25th February, 2019, this Appellate

Tribunal passed an order restraining the Banks from declaring the loan

accounts as ‘NPA’.

6. The ‘Reserve Bank of India’, the regulatory body of the Banks have

filed Interlocutory Application for vacating the interim order dated 25th

February, 2019.

7. Mr. Gopal Jain, learned Senior Counsel appearing on behalf of the

‘Reserve Bank of India’ made following submissions:

7.1. ‘NPA’ affect the financial health of Banks and Financial

Institutions, which is ultimately against the public interest.

Identifying ‘NPAs’ and treating them properly in the books of

accounts of the lender banks is necessary to show a clear and true

financial position of the lender Banks. It is also necessary to identify

‘NPAs’ and to make provisions for non-recovery or under recovery so

that the Banks will not face a situation of sudden dip in their

financial strength. Thus, the appropriate classification of assets in

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the books of the lenders is necessary to present a true and correct

picture of the financial health of the Banks.

7.2. The Committee on the Financial System (under the

Chairmanship of Shri M. Narashimham) in its Report published in

November 1991, had observed that, a proper system of income

recognition and provisioning is fundamental to the preservation of

the strength and stability of the banking system. A proper asset

classification will, however, have to precede this exercise. The

Committee also observed that a policy of income recognition should

be objective and based on record of recovery rather than on any

subjective considerations. The Committee, therefore, opined that for

the purposes of provisioning, Banks and financial institutions should

classify their assets into the following broad groups i.e. ‘Standard’,

‘Sub-standard’, ‘Doubtful’; and ‘Loss’. The Committee also observed

that the Reserve Bank of India should prescribe clear and objective

definitions for these four categories to ensure a uniform, consistent

and logical basis for classification of assets. On the basis of the

recommendation of Narashimham Committee, the ‘Reserve Bank of

India’ issued ‘Prudential Norms on Income Recognition, Asset

Classification and Provisioning’ pertaining to Advances.

7.3. The ‘Reserve Bank's Prudential Norms on Income Recognition,

Asset Classification and Provisioning’ pertaining to Advances are

primarily based on international standards and was first issued on

27th April, 1992 Prudential Norms clearly set out the parameters for

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classification of Loan Accounts as ‘NPA’. Classifying a loan account

as ‘NPA’ is actually an indicator to the lenders to follow the

guidelines with regard to income recognition and provisioning.

7.4. The latest Master Circular on ‘Prudential Norms on Income

Recognition, Asset Classification and provisioning pertaining to

Advances’ was issued on 1st July, 2015.

7.5. The provisioning on ‘NPAs’ has to be made on the basis of the

period for which the asset has remained non-performing or the

availability of security and the realizable value thereof or both. A

ninety days’ delinquency is uniformly applicable to all loans and

advances, as is done internationally, as it is essential to identify

impairment in order to provide for it. Any deferment in asset

classification and provisioning as against the ‘Reserve Bank of India’

norms will lead to non-recognition of stress in the books of the

lenders which will distort the financial statements published by

them, The financial stress must be recognized and acted upon by the

lenders, irrespective of borrower specific issues.

7.6. Identifying and classifying a defaulted loan account in the

Books of the Bank as ‘NPA’ is only a process of treating the account

as such and following the guidelines in making provisions etc. in the

books of the lender Bank. It doesn't mean that there will be an

immediate recovery process. Even after classifying a loan account as

‘NPA’, all options of re-scheduling or Resolution Process are open and

there is no impediment to any Resolution Process. The ‘Reserve Bank

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of India’ has not barred banks from sanctioning need based

additional finance to borrowers whose accounts are classified as

‘NPA’. On the contrary, the Reserve Bank's extant guidelines envisage

a situation where banks may need to sanction additional finance to

borrowers under stress to revive / rehabilitate the borrower and to

preserve the economic value of the asset.

8. Learned counsel for the ‘Reserve Bank of India’ produced ‘Master

Circular- Prudential Norms on Income Recognition, Asset Classification and

Provisioning’ pertaining to advances as circulated on 1st July, 2015. The

‘NPA’ has been defined therein at Clause 2.1, which reads as follows:

“2.1 Non performing Assets

2.1.1 An asset, including a leased asset,

becomes non performing when it ceases to

generate income for the bank.

2.1.2 A non performing asset (NPA) is a loan or

an advance where;

i. interest and/ or instalment of

principal remain overdue for a period

of more than 90 days in respect of a

term loan,

ii. the account remains 'out of order' as

indicated at paragraph 2.2 below, in

respect of an Overdraft/Cash Credit

(OD/CC),

iii. the bill remains overdue for a period

of more than 90 days in the case of

bills purchased and discounted,

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iv. the instalment of principal or interest

thereon remains overdue for two crop

seasons for short duration crops,

v. the instalment of principal or interest

thereon remains overdue for one crop

season for long duration crops,

vi. the amount of liquidity facility

remains outstanding for more than

90 days, in respect of a securitisation

transaction undertaken in terms of

guidelines on securitisation dated

February 1, 2006.

vii. in respect of derivative transactions,

the overdue receivables representing

positive mark-to-market value of a

derivative contract, if these remain

unpaid for a period of 90 days from

the specified due date for payment.”

9. Clause 4.2.4 also deals with classification of an asset as ‘NPA’ with

regard to ‘Accounts with temporary deficiencies’, is as follows:

“4.2.4 Accounts with temporary deficiencies

The classification of an asset as NPA should be based

on the record of recovery. Bank should not classify an

advance account as NPA merely due to the existence of

some deficiencies which are temporary in nature such

as non-availability of adequate drawing power based

on the latest available stock statement, balance

outstanding exceeding the limit temporarily, non-

submission of stock statements and non-renewal of the

limits on the due date, etc. In the matter of

classification of accounts with such deficiencies banks

may follow the following guidelines:

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i) Banks should ensure that drawings in the

working capital accounts are covered by the

adequacy of current assets, since current assets

are first appropriated in times of distress.

Drawing power is required to be arrived at based

on the stock statement which is current. However,

considering the difficulties of large borrowers,

stock statements relied upon by the banks for

determining drawing power should not be older

than three months. The outstanding in the

account based on drawing power calculated from

stock statements older than three months, would

be deemed as irregular.

A working capital borrowal account will become

NPA if such irregular drawings are permitted in

the account for a continuous period of 90 days

even though the unit may be working or the

borrower's financial position is satisfactory.

ii) Regular and ad hoc credit limits need to be

reviewed/ regularised not later than three

months from the due date/date of ad hoc

sanction. In case of constraints such as non-

availability of financial statements and other data

from the borrowers, the branch should furnish

evidence to show that renewal/ review of credit

limits is already on and would be completed soon.

In any case, delay beyond six months is not

considered desirable as a general discipline.

Hence, an account where the regular/ ad hoc

credit limits have not been reviewed/ renewed

within 180 days from the due date/ date of ad

hoc sanction will be treated as NPA.”

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10. From the aforesaid provisions, we find that ‘NPA’ is a loan or an

advance where interest and/or instalment of principal remain overdue for a

period of more than 90 days in respect of a term loan; or where the account

remains ‘out of order’ in respect of an Overdraft/ Cash Credit (OD/ CC) etc.

11. Thus, we find that ‘NPA’ relates to loan or an advance given by the

Banks and not the Company (‘Corporate Debtor’). It is an asset i.e. loan or

advance which becomes non-performing when it ceases to generate income

for the Bank.

12. During the ‘Resolution Process’, the Company (‘Corporate Debtor’) is

required to continue as a going concern. An idea was given that if the asset

of the ‘Corporate Debtor’ is declared as ‘NPA’ then it will be contrary to the

provisions of the ‘Insolvency Resolution’ as per which the ‘Corporate Debtor’

should continue as a going concern. However, we find that ‘NPA’ relates to

an asset i.e. loan or advance which becomes non-performing when it ceases

to generate income for the Bank. Thus, it relates to the Banks and we are

satisfied that declaration of ‘NPA’ by the Bank in no manner will affect the

Company (‘Corporate Debtor’) to continue as a going concern.

13. In view of the aforesaid position of law, we modify the order dated

25th February, 2019 and allow the Banks to classify loan accounts of any of

the Group Companies of ‘IL&FS’ as ‘NPA’ without debiting any amount from

the account of the ‘Amber Entities’ and ‘Red Entities’, if defaulted to pay

after order of ‘Moratorium’ was passed on 15th October, 2018.

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14. The classification of an account as ‘NPA’ should not result in

withdrawal of support to viable borrowal accounts, though it will be open to

the Banks to classify any loan accounts as ‘NPA’ for the purpose of

differential treatment in the books of accounts of the Banks.

I.A. No. 1139 of 2019 filed by the ‘Reserve Bank of India’ stands

disposed of with aforesaid observations and directions.

[Justice S.J. Mukhopadhaya]

Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI 2nd May, 2019

AR