Ruling in favour of Infrastructure Leasing and Finance Limited (ILFS) units, the Supreme Court on Friday directed Haryana Shehari Vikas Pradhikaran (HSVP) to deposit within three months 80% or Rs1,925 crore of total debt due of over Rs2,400 crore, into an escrow account.
The bench of justice DY Chandrachud, justice MR Shah and justice Sanjiv Khanna, says, "The deposit into the escrow account shall continue to be maintained in escrow, subject to any order that may be passed by NCLAT or any competent statutory authority, and shall not be appropriated by the escrow bank without specific permission."
"Both parties - IL&FS' special purpose vehicles (SPVs) Rapid Metro Rail Gurgaon Ltd (RMGL) and Rapid Metro Rail Gurgaon South Ltd (RMGSL) and HSVP - have the liberty to refer any disputes relating to other rights, as well as those arising from the audit report commissioned by the Comptroller and Auditor General of India (CAG) for determining the debt due, to arbitration," the SC says.
IL&FS had won the two-phased Gurgaon Metro Project - that were developed through its subsidiary SPVs - RMGL and RMGSL - in 2009 and 2013, respectively for the development of Metro rail link from Sikanderpur Station on M.G. Road to NH-8 and from Sikanderpur Station on M.G. Road to Sector 56, Gurugram.
Both the contracts were terminated by RMGL and RMGSL on 7 June 2019, to take effect from 8 September 2019, after the expiry of 90 days, whereas, HSVP terminated both the contracts on 26 August 2019.
In a release, IL&FS says, "Due to multiple unmet obligations by the HSVP - under the concession agreement IL&FS SPVs had terminated the concession agreements in September 2019 and demanded certain termination payments due to them under the concession agreement."
HSVP, however refuted the contention of IL&FS SPVs and challenged the matter in High Court of Punjab and Haryana.
After hearing both the parties, in September 2019 the HC ruled that operations and maintenance of the metro link be handed over to HSVP. It also directed CAG to carry out financial audit of total debt due after which HSVP would pay 80% of debt due (as determined by CAG) in the escrow account within 30 days of submission of CAG report and sought that all other disputes to be settled through arbitration.
IL&FS says, as per the orders from the HC, in October 2019, its SPVs handed over the project to the Haryana government unit.
Auditors appointed by CAG submitted their report on debt due and determined the same at Rs2407 crore. The report was taken note by Court on 28 September 2020.
Despite CAG submitting the audit report in compliance of the HC order, HSVP refused to meet its obligations and pay the compensation as ordered vide the HC order, while raising several objections to CAG audit reports and not complying with HC order. IL&FS then decided to approach the apex court.