# In the matter of IVRCL Chengapalli Tollways Ltd.

> NCLT judgment dated 2023-03-14. Citation: TCN-2023-NCLT-04258. The case involves an application filed by IFCI Limited, a government of India company and…

- **Court:** NCLT
- **Order date:** 14 Mar 2023
- **Citation:** TCN-2023-NCLT-04258
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ivrcl-chengapalli-tollways-ltd-93569114

## Summary

### Background

The case involves an application filed by IFCI Limited, a government of India company and financial institution, against the Resolution Professional of IVRCL Chengapalli Tollways Ltd (ICTL). IFCI sought the rejection of the Resolution Professional's decision to not admit IFCI's claim as a financial creditor in the Corporate Insolvency Resolution Process (CIRP) of ICTL. The core issue revolves around whether Compulsorily Convertible Debentures (CCDs) subscribed by IFCI should be treated as debt or equity. The National Highway Authority of India (NHAI) had invited proposals in April 2009 for a project involving the construction, operation, and maintenance of a six-lane highway on Chengapalli. IVRCL Limited won the bid. A concession agreement was entered into between NHAI

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## Facts

In April 2009, the National Highway Authority of India (NHAI) invited proposals for a project to construct, operate, and maintain a six-lane highway from Km 102.035 to Km 144.680 on Chengapalli. IVRCL Limited won the bid after scrutiny. On March 25, 2010, NHAI and IVRCL Chengapalli Tollways Limited (ICTL) entered into a Concession Agreement. The Applicant, IFCI, agreed to provide financial assistance to the Corporate Debtor, ICTL, through Compulsorily Convertible Debentures (CCDs). A Letter of Intent (LoI) was issued on September 28, 2010. The terms of the CCDs were modified several times. IFCI subscribed to CCDs numbering 12,50,00,000 with a face value of Rs.10/- each, amounting to Rs. 125,00,00,000/-, via a Debenture Subscription Agreement (DSA) dated October 14,

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## Issues and analysis

### Issue 1: Whether Compulsory Convertible Debentures subscribed by the applicant is to be treated as Equity or …

**Ratio:** The ratio decidendi is that Compulsory Convertible Debentures (CCDs) are to be treated as

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**Reasoning:** The tribunal reasoned that the CCDs were initially treated as equity as per the Debenture

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**Interpretation:** The interpretation is that the nature of an instrument, particularly CCDs, is

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**Application:** The ratio and reasoning were applied to the specific facts of the case, where

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## Parties

- **Judges:** TELAPROLU…; SH. CHARAN…
- **Appellants:** IFCI Li…
- **Respondents:** IVRCL Chegapalli…; Sutanu…

## Timeline

- **2009-04-01 — NHAI Invites P…**: National Highway Authority of India…
- **2010-03-25 — Concession Ag…**: NHAI and IVRCL Chengapalli Tollways Limited…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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