NCLT Mumbai Upholds IL&FS' Power To Raise Price of Its BKC Headquartes, Rejects Chronos' Plea To Enforce ₹1,080-Crore LoI

The National Company Law Tribunal (NCLT) at Mumbai has recently held that IL&FS was contractually empowered to unilaterally amend the Letter of Intent and increase the bid consideration for the sale of its iconic IL&FS Financial Centre in Bandra Kurla Complex, Mumbai refusing to compel execution of the definitive agreement at the originally approved value of Rs 1,080 crore.

The ruling effectively permits IL&FS to revise the sale price to Rs 1,481 crore after approvals were granted, since the LoI itself allowed such unilateral modification.

The application had been filed by Chronos Properties Private Limited, whose bid of Rs 1,080 crore for the IL&FS Financial Centre was approved by the Committee of Creditors on December 17 2021, by the IL&FS new board on January 27, 2022, by Justice D K Jain (Retd.) on 8 March 2022, and finally received NCLT approval on 23 September 2022.

The order was delivered by the coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar on 28 November.

"This LoI was subject to the approvals by the ILFS's Committee of Creditors, which was granted on 17.12.2021. ILFS's New Board granted approval on 27.01.2022. The Hon'ble (Retired) Justice D.K. Jain granted his approval on 08.03.2022 and the NCLT vide its Order dt. 23.09.2022 granted approval to the LoI”, the tribunal recorded.

Following execution of the LoI in March 2022, Chronos furnished a performance guarantee of 10% of the consideration amount. Certain steps remained pending, including permissions from the Mumbai Metropolitan Region Development Authority, which granted its sanction on 16 April 2024. Chronos subsequently proceeded with stamp adjudication, inspected original documents in June 2024 and repeatedly requested IL&FS to execute the definitive agreement.

On 16 August 2024, IL&FS issued a unilateral amendment revising the consideration to Rs 1,481 crore on the basis of fresh valuation reports. It argued that the principle of value maximisation under the IL&FS Resolution Framework required enhancement of the consideration. Chronos approached the tribunal seeking to quash the unilateral amendment and enforce the original bid value of Rs 1,080 crore, arguing that the LoI was a binding contract incapable of such modification.

The tribunal rejected this contention after analysing clauses of the LoI which explicitly allowed IL&FS to amend, modify or supplement the LoI, including by imposing additional financial obligations, while giving Chronos the right to terminate the agreement within seven days if such changes were unacceptable.

The tribunal observed, “The parties have agreed expressly under this contract or LoI that if there is modification or unilateral amendment in the LoI in the existing obligations, monetary or otherwise, under the LoI, Chronos has right to terminate the agreement and the bank guarantee would be refunded without interest. This term gives unilateral power to amend, modify or supplement the existing obligations under the contract.”

Refusing to interfere with the revised consideration or compel execution at the older value, the tribunal held that specific performance could not be ordered where the contract itself permitted unilateral modification.

It observed, “Moreover, granting the directions to execute a definitive agreement between the parties, would amount to directing specific performance of the contract in spite of IL&FS having the unilateral power to amend, modify or supplement the LoI, keeping in view the object of the Resolution Framework as such.”

IL&FS had additionally argued that Chronos stood disqualified because its performance guarantee expired on 16 April 2025. Chronos responded that IL&FS never communicated any requirement for renewal and offered to deposit the amount with the tribunal.

Accepting the explanation, the tribunal noted, “Indubitably, IL&FS never decided or communicated any further period for extension or renewal of the Performance Bank Guarantee and the Performance Bank Guarantee as well as Demand Draft provided by Chronos remained valid for more than a Year. Accordingly, we are of the considered view that no disqualification can be ascribed to the Chronos in terms of clause 2.8.6 (e) of the RFP.”

Holding that the LoI remained a binding contract but with express provisions permitting unilateral amendment, the tribunal directed Chronos to tender the bank guarantee or demand draft to the Registrar within 30 days, failing which it would stand disqualified from acquiring the property under the bidding terms.

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