NCLT restrains former IL&FS officials from disposing of personal assets

Photo: Reuters

The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday allowed the government’s interim plea to restrain nine erstwhile top officials of Infrastructure Leasing and Financial Services Ltd (IL&FS) from disposing of their personal assets.

NCLT directed Ravi Parthasarathy, A.K. Saha, Hari Sankaran, G. Ramachandran, R.C. Bawa, S. Rengarajan, Mukund Sapre, Pradeep Puri, and Vibhav Kapoor to disclose their assets in an affidavit.

“We are relying upon the interim investigation report of the SFIO and directing respondents,” said the NCLT bench. “The respondents are restrained from mortgaging, alienating, selling or creating any third party rights on their movable or immovable assets, which are fully or partly owned by the respondents.”

NCLT also allowed all the erstwhile board members mentioned in SFIO’s interim report to file their response in three weeks and gave the ministry of corporate affairs (MCA) two weeks to file its response. The tribunal will hear the matter further on 16 January.

On Monday, before the tribunal’s ruling, Sanjay Shorey, director, legal prosecution, MCA, argued that these nine people collectively took all the key decisions of the company.

“The accounts of the holding company were coloured and decorated at the cost of public sector banks’ money,” argued Shorey. “IL&FS Ltd and IL&FS Financial Services Ltd (IFIN) kept raising funds on the basis of bogus and fictitious but good credit ratings and this short-term loans were passed to subsidiaries, joint ventures and special purpose vehicles to help service their debts,” he said.

The tribunal allowed the government to add in its petition six former top officials of IL&FS and its subsidiaries as parties based on an interim report filed by SFIO.

Fredun De Vitre, senior counsel appearing for Sankaran, argued that the allegations made against the former vice chairman of IL&FS are mere generalised statements without any specific details of any wrongdoing.

Sankaran had not gained a single rupee from any transaction and also just a week before the new board had taken over the old board had also asked for a similar moratorium and it had similar plans to sell the company’s assets, said Di Vitre. Sankaran has devoted an entire career to the company, he said, adding that his client has already given details in an affidavit about his movable and immovable assets and is willing to give that again as well and they are cooperating with the new board as well.

However, the allegations made by the government department are clearly without any substance, De Vitre said.

Senior counsel Vikram Nankani, appearing for K. Ramachandran, said that he is impeded in the matter on Monday without giving him an opportunity to put his stand, passing any order against him would be a breach of natural justice.

The government also added 301 subsidiaries of IL&FS as parties to the case as against an earlier tribunal direction to add 348 subsidiaries. The government informed NCLT that the remaining subsidiaries, mostly foreign firms are now not in existence.

In October, NCLT had replaced the earlier board of IL&FS by Uday Kotak-led board. It had also initiated a probe into the financials of the company by the government body.

The government also informed the tribunal of the proposed stake sale of IL&FS in two of its clearing corporations. IL&FS has accumulated a debt of more than ₹91,000 crore and has defaulted on some of its commitments.

Also Read:

More than a dozen PE firms, banks show interest in buying stakes in IL&FS units

Investment bankers reach out to potential buyers for IL&FS assets

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.