IL&FS group receives Rs 1,925 cr from Haryana govt for Gurgaon metro

Supreme Court had on March 26 directed the state's urban local authority to deposit 80% of the total debt of Rs 2,407 cr within three months into the escrow accounts of two IL&FS firms

IL&FS said on Sunday that it has received Rs 1,925 crore from Haryana Shehari Vikas Pradhikaran (HSVP), the state’s urban local authority, as interim termination payment for the Gurgaon Rapid Metro system that is now run by the Delhi Metro Rail Corporation.

The Supreme Court had, on March 26, 2021, directed HSVP to deposit 80 per cent of the total debt due amounting to Rs 2,407 crore within three months into the escrow accounts of the two IL&FS subsidiaries, Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL). The use of money that has flowed in the escrow accounts would be subject to the orders of the NCLAT or any other competent legal authority under the Supreme Court ruling.

The resolution of Rs 1,925 crore forms part of the resolution of Rs 61,000 crore total recovery estimated by the government-appointed IL&FS board. This represents resolution of over 61 per cent of overall debt of about Rs 99,000 crore (fund based and non-fund based) as of October 2018.

“The Supreme Court ruling on March 26, 2021, followed by HSVP's compliance with the order and transfer of the payable amount to the IL&FS Group entities, will go a long way in protecting the interest of stakeholders/lenders in the Indian infrastructure sector. This ruling will also set a precedent for other projects wherein Infrastructure companies, including IL&FS, are seeking payment of their legitimate dues and enforceability of valid contracts and concession agreements with various state governments,” said a company spokesperson.

Two other SPVs of IL&FS subsidiary IL&FS Transportation Networks Limited (ITNL) are also seeking resolution of disputes with the Jharkhand government for Rs 500 crore payment in annuities. A case was filed in the Jharkhand high court in March this year.

The Jharkhand SPVs were involved with construction of Ranchi Ring Road section of VII on build-operate and transfer basis and a 23-km road patch on the national highway number 33. The projects were developed with semi-annual annuities of around Rs 225 crore.

Andhra Bank is the lead bank in the RMGL along with Punjab National Bank, Indian Overseas Bank, Indian Bank, Punjab & Sindh Bank, UCO Bank, Bank of India and Dena Bank (presently Bank of Baroda). Canara Bank is the lead bank in RMGSL along with Andhra Bank, Corporation Bank (presently Union Bank of India), Punjab & Sindh Bank, Central Bank of India and IIFC (UK) Ltd.

IL&FS had bagged the two-phased Gurgaon Metro Project developed through RMGL and RMGSL in 2009 and 2013 but RMGL and RMGSL terminated the concession agreements in September 2019 due to disputes that had impacted the commercial operations of the systems. These SPVs demanded termination payments under the concession agreement. HSVP had, however, refuted the contention of RMGL and RMGSL citing concessionaire event of default and challenged the matter in High Court of Punjab and Haryana.

The High Court ruled in September 2019 that O&M of the Metro Link be handed over to HSVP and directed CAG to carry out financial audit of total debt due; and thereafter HSVP to pay 80 per cent of due debt determined by CAG in the escrow account within 30 days of submission of CAG report; and sought that all other disputes be settled through arbitration.

The 80 per cent of debt due represents the minimum amount payable across either event, concessionaire event of default or authority event of default. HSVP had consented to the high court order and accordingly took over the metro link project operations in October 2019 thereby resulting in no inconvenience to the general public. Further, the audit of debt due was conducted by an independent firm of Chartered Accountants appointed by CAG and the scope of the audit was decided after considering inputs received from both IL&FS and HSVP.

The auditors appointed by CAG determined the debt to be Rs 2,407 crore and submitted their report to the High Court on September 28, 2020. IL&FS SPVs thereafter moved the Supreme Court in January 2021 seeking termination charges.