Mumbai: The government on Friday moved the Mumbai bench of the National Company Law Tribunal (NCLT) seeking a three-month moratorium from legal proceedings in any court against Infrastructure Leasing and Financial Services (IL&FS) Ltd and its 348 subsidiaries by any lender of the group or its subsidiaries.
The government argued that when it is working on the revival of IL&FS, having around 70-80 cases against the group in multiple jurisdictions across the nation will derail the resolution process.
“The earlier board had said in its annual reports that it had only 169 subsidiaries. But when we took over the company, in five days we found out that IL&FS has 348 subsidiaries, joint ventures and other affiliates and we are still in the process of ascertaining the total assets and liabilities of the company," said Sanjay Shorey, joint legal director in the ministry of corporate affairs (MCA). “We need breathing space and a certain time of calm to see the full picture of the company."
The government also argued that the Serious Fraud Investigation Office (SFIO) and other government agencies are investigating the affairs of the group and that if the new board has to face several cases, it will be difficult to come out with the revival plan for a group of this size.
“Our prayer is limited for 90 days and not for an infinite time, which may be prejudicial to any lender or stakeholder of IL&FS," said Shorey. “The tribunal has given the shield to the new board and now it must provide wings to fly towards the revival."
Ravi Kadam, senior counsel for IL&FS, argued that the new board has been appointed by this tribunal and is working as the court’s official. The relief that the government is seeking is under Section 241 (2), 242 and 244 of the Companies Act 2013. “Several group companies, which are not NBFCs (non-banking financial companies) have received the notices and a few are also facing insolvency cases. The board is seeking to just stay on those and future such developments," argued Kadam. “It needs to be protected from the past conduct of the board," he said.
Aditya Birla Finance Ltd, which has an exposure of ₹ 150 crore in a IL&FS group company, objected. “We are seeking to recover our dues from a road infrastructure company of IL&FS. The matter is in arbitration and Delhi high court has passed an order that restrains anyone from selling or disposing assets of that company till further orders," argued Mustafa Doctor, senior counsel for Aditya Birla Finance. The tribunal, presided by over V.P. Singh and Ravikumar Duraisamy, reserved its order after hearing the arguments.
IL&FS has debts of over ₹ 91,000 crore.