Mumbai: Challenging last week’s order for dismissal of a plea for moratorium by Infrastructure Leasing and Financial Services (IL&FS) Ltd and its 348 subsidiaries, the government has moved the National Company Law Appellate Tribunal (NCLAT), according to two people familiar with the development.
The Mumbai bench of the National Company Law Tribunal (NCLT) had rejected the government’s plea for a three-month moratorium for IL&FS and its 348 subsidiaries against legal action by lenders. IL&FS has debts of over ₹ 91,000 crore.
“The ministry of corporate affairs moved the NCLAT on Sunday and the hearing is slated to come up today," said one of persons quoted above. “We believe we have a case here," said the second person close to the development.
The NCLT, presided by V.P. Singh and Ravikumar Duraisamy, ruled in its order that some of the group companies of IL&FS were undergoing the corporate insolvency resolution process (CIRP). “For each company an application has to be made to initiate the CIRP and a blanket moratorium cannot be passed for all 348 companies," ruled the tribunal in its 12-page order issued during the weekend.
The government had on Friday moved the NCLT seeking the moratorium. The government argued that as it was working on the revival of IL&FS, the 70-80 cases the group was fighting in various courts would 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 that IL&FS had 348 subsidiaries, joint ventures and other affiliates. 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.
“We need breathing space and a certain time of calm to see the full picture," he added.
The government also argued that the Serious Fraud Investigation Office (SFIO) and other government agencies were investigating the affairs of the group and that if the new board had to face several cases, it would be difficult to come out with a revival plan.
“Our prayer is limited to 90 days," said Shorey. “The tribunal has given the shield to the new board, and now it must provide it wings," he added.
Aditya Birla Finance Ltd, which has an exposure of ₹ 150 crore in an 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 the Delhi High Court has passed an order that restrains anyone from selling or disposing of assets of that company till further orders," argued Mustafa Doctor, senior counsel for Aditya Birla Finance.