NCLT Mumbai Approves ₹75 Crore IL&FS Financial Services–Siva Green Settlement

The National Company Law Tribunal (NCLT) at Mumbai recently approved a One Time Settlement of Rs 75 crore between Infrastructure Leasing and Financial Services Limited (IL&FS) and Siva Green Power Projects India Private Limited. It held that the proposal aligns with the IL&FS Group Resolution Framework mandated by the National Company Law Appellate Tribunal. A coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar recorded that the settlement was necessitated by the NCLAT's enabling orders of October 15, 2018, later confirmed on March 12, 2020, which authorised the reconstituted board of IL&FS Financial Services Limited to preserve value across the group. It noted that the proposal had been devised “keeping in mind the rights and interests of all stakeholders of IFIN and the Applicant Group, and with a view to maximizing value for all.” The dispute arose from outstanding dues owed by Siva Green Power and other Siva Group entities to IL&FS Financial Services Limited (IFIN). In December 2015, IFIN invested Rs 190 crore in unsecured Optionally Convertible Debentures issued by Siva Green. It also came to hold 7.85 crore shares in Tata Teleservices Limited that had been pledged by the Siva Group under a shareholder option agreement. The agreement required Shanmugha Real Estate and Promoters Private Limited, another Siva Group entity, to buy back the shares for Rs 253.56 crore if IFIN exercised a put option. IFIN invoked the option on 4 April 2019 and issued a separate demand to Siva Green seeking repayment of the debenture amount. When neither payment was made, IFIN filed an insolvency application, which NCLT Chennai dismissed in December 2019 for absence of debt. IL&FS submitted that several One Time Settlement proposals were received from the Siva Group in June and July 2024 offering Rs 60 crore in cash and two bungalows valued at Rs 25 crore. It argued that the IFIN board approved the proposal in August 2024, followed by IL&FS and the supervision of Justice D K Jain, and that the settlement was essential to resolve IFIN's distressed assets. The Union of India sought to implead two former independent directors of IFIN based on a Serious Fraud Investigation Office report. The tribunal held that the settlement complied with the NCLAT mandated framework and directed IL&FS to maintain the amount in a fixed deposit and distribute it only with the tribunal's approval. It clarified that the settlement does not in any manner prejudice the ongoing SFIO investigation into the affairs of IL&FS. On the government's plea implead two former independent directors of IFIN on the SFIO's investigation, it found that “no allegation on the involvement of the Respondents herein have been made so far in any of the investigation report issued by SFIO in relation to IL&FS and its group entities” and rejected the application. Case Title: Infrastructure Leasing & Financial Services Limited vs Union of India, through the Ministry of Corporate Affairs Case Number: CA No. 282/MB/2025 in CP No. 3638/MB/2018 For Applicant: Advocates Kuber Dewan, Neeharika Aggarwal, Kaustubh Srivastava For Respondent: Advocates Aditya Sikka, Onshi Jakhar Click Here To Read/Download Order

NCLT Mumbai Approves ₹75 Crore IL&FS Financial Services–Siva Green Settlement

Kirit Singhania

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