Corporate Insolvency Resolution Process Initiated Against IL&FS Group Special Purpose Vehicle with Debt Default Exceeding ₹227 Crores; SFIO Investigation Does Not Bar Admission
In a significant development under the Insolvency and Bankruptcy Code, 2016 (IBC), the National Company Law Tribunal (NCLT), Mumbai Bench-II, has admitted the Corporate Insolvency Resolution Process (CIRP) petition filed by West Gujarat Expressway Limited, an IL&FS group special purpose vehicle (SPV). The order was pronounced on 2nd November 2026 before Shri Ashish Kalia, Member (Judicial), and Shri Banwari Lal Meena, Member (Technical).
The Corporate Debtor, incorporated in 2005 to develop and operate the Jetpur-Gondal-Rajkot section of National Highway 8B under a Build-Operate-Transfer (BOT) model, had ceased significant business operations following the termination of its concession agreement by the National Highways Authority of India (NHAI) in December 2021 and subsequent handover of the project on 1st April 2022.
The petition, filed under Section 10 of the IBC, was supported by audited financial statements for FY 2024-25, which revealed total assets of approximately ₹85.34 crores against liabilities of ₹319.81 crores, culminating in a negative net worth of ₹234.46 crores. The total debt in default as on 14th January 2026 stood at ₹227.20 crores, well above the statutory threshold of ₹1 crore stipulated under Section 4(1) of the Code.
The NCLT observed that the petition was duly authorized by the Corporate Debtor's Board, the Board of IL&FS Transportation Networks Ltd. (ITNL), the New Board, shareholders, and was approved by Justice (Retd.) D.K. Jain under the IL&FS Resolution Framework. The Bench further noted that the petition was within limitation, considering the acknowledgment of debt in the audited financial statements, including those for FY 2024-25, in line with Section 18 of the Limitation Act, 1963, read with Section 238A of the IBC.
The Tribunal also clarified that the ongoing Serious Fraud Investigation Office (SFIO) probe into the Corporate Debtor does not preclude the admission of the insolvency petition. The appointed Resolution Professional is directed to take cognizance of the investigation while performing duties, especially regarding avoidance transactions and fraudulent trading under Sections 43 to 51 and 66 of the Code.
However, the Tribunal declined the Corporate Debtor's request for a direction that future recoveries be distributed under the Revised Distribution Framework at this stage, deeming such direction premature as it could pre-empt the statutory scheme, including the Committee of Creditors' role and the waterfall mechanism under Section 53.
Following admission, the NCLT declared a moratorium under Section 14 of the IBC, prohibiting institution or continuation of suits, transfer or disposal of assets, and recovery actions against the Corporate Debtor, effective until the conclusion of the CIRP or liquidation. The Bench appointed Mr. Parshva Manoj Shah as the Interim Resolution Professional (IRP) to manage the Corporate Debtor's affairs during the CIRP period.
The order mandates the Corporate Debtor's management and officers to provide full cooperation to the IRP, furnishing all requisite documents and information within a week. The Tribunal also directed the IRP to submit periodic reports on the progress of the CIRP.
This admission marks a crucial step in resolving the financial distress of West Gujarat Expressway Limited, a key infrastructure entity within the IL&FS group, amidst ongoing regulatory and investigative scrutiny.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Section 10 petition by corporate debtor - Petition admitted where debt and default above statutory threshold were established, filing was duly authorised, application was within limitation on basis of acknowledgments in audited financial statements, and pendency of SFIO investigation was held not to bar admission - Prayer for direction that future recoveries be distributed under Revised Distribution Framework was rejected as premature.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 4(1), 10, 10A, 11, 14, 16, 18 (Limitation Act, 1963), 43 to 51, 53, 66, 238A; Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 Rule 7; Arbitration and Conciliation Act, 1996 Section 73; Companies Act, 2013 Sections 241, 242; IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulation 6
West Gujarat Expressway Limited, (NCLT)(Mumbai Bench-II) : Law Finder Doc Id # 3011034
