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The National Company Law Tribunal has approved the sale of IL&FS shares in Gujarat International Finance Tec-City Company Limited (GIFTCL/ GIFT City) to Gujarat Government for an aggregate sale consideration of Rs 32,70,94,000. (NCLT Order - IL&FS vs UOI- GIFT City)
The sale was approved by the Bench comprising Acting Chairperson, NCLT, BSV Prakash Kumar.
The idea of GIFT City was conceived in 2007 when Prime Minister Narendra Modi was the Chief Minister of Gujarat and was expected to bring investments worth Rs 1 to 3 trillion in the next 10-15 years.
IL&FS and Gujarat Government subsequently entered into an MoU for a 50-50 joint venture to develop an integrated township/International Financial Services City (IFSC) in the State.
The Joint Venture Agreement, provided an exit option to either of the parties with a right of first refusal to the other.
In January 2019, when IL&FS communicated its intention to divest the shareholding in GIFTCL, the Gujarat Government also expressed its willingness to purchase IL&FS shares.
The sale was subsequently approved by IL&FS' Committee of Creditors in terms of the approved Resolution Framework and was placed before Justice (Retd) DK Jain who supervises the operation of IL&FS resolution process.
IL&FS thereafter moved the NCLT to consummate the sale agreement.
Before NCLT, IL&FS submitted that the sale ensured value maximization, commercial viability and financial stability for all stakeholders. It was also recorded that the sale consideration of Rs 32,70,94,000 was higher than fair market value of IL&FS shares.
Approving the sale, the NCLT clarified that the sale of shares of GIFTCL held by IL&FS to Gujarat Government shall be free and clear from all encumbrances, lien security interest and third party claims, including any statutory or tax claims.
The sale amount shall be credited into a designated Escrow Account and shall be maintained as an interest bearing fixed deposits.
The NCLT also permitted withdrawal of Rs 3 crore from the Escrow Account maintained in connection with IL&FS resolution process, to meet the expenses towards resolution costs.
The Central Government had moved NCLT, Mumbai against IL&FS and its Group Companies on the ground that the affairs of the company were being conducted in a manner prejudicial to the public interest.
Subsequently, the NCLAT passed an interim order, inter alia, staying institution or continuation of suits etc by or against IL&FS and its 348 group companies.
For effective resolution of the debt, the IL&FS group companies were classified into various categories based on their financial health.
Entities in the "green" category, such as GIFTCL were allowed to continue in accordance with their resolution framework subject to the supervision of Justice (Retd) DK Jain.
IL&FS was represented by Advocate Aditya Sika.
Read the order: