NCLAT directs IL&FS Engineering and Construction to extend bank guarantee to NHAI

The National Company Law Appellate Tribunal (NCLAT) Tuesday permitted the debt ridden IL&FS and its group firm IL&FS Engineering and Construction Company to extend a bank guarantee of Rs 60.29 crore issued to state-run National Highways Authority of India (NHAI).

A two-member bench headed by Chairman Justice S J Mukhopadhaya said it was not inclined to NHAI's plea to direct to IL&FS firm to invoke the bank guarantee, which is lapsing on March 1, 2019.

"Taking into consideration the facts and circumstances of the case, while we are not inclined to direct M/s IL&FS Engineering and Construction Company Ltd or IL&FS to invoke the Bank Guarantee aforesaid, allow the alternative prayer for extension of the Bank Guarantee for another period of six months from 1st March, 2019," said NCLAT.

It further said: "If such request is made to the concerned Bank, they will extend it for six months." The appellate tribunal also said that its directions "will not come in the way of the IL&FS or Union of India to negotiate with NHAI for amicable foreclosure of the contract. They may negotiate and foreclose the contract".

NCLAT's order came over an application filed by NHAI to direct IL&FS Engineering and Construction Company to invoke the Bank Guarantee.

However, during the hearing IL&FS submitted that they are negotiating with NHAI for amicable foreclosure of the contract.

This was also supported by the Ministry of Corporate Affairs during the proceedings.

IL&FS and its over 300 group subsidiaries, which are facing a debt of over Rs 90,000 crore, are under moratorium issued by the NCLAT.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)