The Principal Bench of National Company Law Tribunal (NCLT) has approved the stake sale of IL&FS in Gujarat International Finance Tec-City Company Limited (GIFTCL) to the Government of Gujarat.

The crisis-ridden IL&FS holds 50 percent stake in GIFTCL. Notwithstanding the liability of GIFTCL, the Gujarat Government has agreed to pay positive equity value of 100 percent of the IL&FS stake in GIFTCL, by which, the positive equity value of over Rs 32.70 crore will come to IL&FS.

In its order the tribunal said that the applicant, IL&FS had submitted that the sale resolution has been conducted to ensure a fair resolution upholding the key principles of the value maximisation, commercial viability and financial stability for all stakeholders.

IL&FS also submitted in order to facilitate and implement the sale or resolution process of GIFTCL, an amount of Rs 61,84,403 is excluded as resolution process costs incurred for meeting various expenditures, other applicable taxes from the sale proceeds of its shareholding in GIFTCL to the state government.

"In view of the relief sought by the applicant, this bench hereby approved that sale of shares of GIFTCL held by IL&FS to Governor of State of Gujarat/Gujarat Urban Development Company Limited shall be free and clear from all encumbrances, liens, security interest and third party claims (including any statutory or tax claims) upon receipt of sale consideration from GUDC," it said.

That sale consideration payable to IL&FS excluding resolution process costs shall be credited into a designated escrow account intimated to the infrastructure lending group and such funds shall be maintained as interest bearing fixed deposits.

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The National Company Law Appellate Tribunal (NCLAT) had permitted green entities to continue in accordance with the resolution framework subject to the supervision of the Justice (Retd.) D.K. Jain. Since GIFTCL has been classified as a "Green" entity, IL&FS has commenced the resolution process of GIFTCL.

The Principal bench of NCLT also permitted IL&FS to withdraw a sum of Rs 3 crore from the escrow account opened to keep sale consideration for meeting the additional process resolution costs that may arise, after approval by the Board of Directors appointed by the tribunal.

"The distribution of the remaining purchase consideration is hereby subjected to further orders of this Bench," it said.

First Published:May 27, 2020 3:17 PM IST