IL&FS building in Mumbai. (Source: Annual Report)

Government Moves NCLT Seeking Immunity For Directors Of IL&FS Arms

The government on Monday filed an application with the National Company Law Tribunal, Mumbai, seeking immunity for the newly-appointed directors of the subsidiaries of the crippled Infrastructure Leasing & Financial Services Group from any future adverse outcomes.

Soon after taking over the company following its defaults and appointing a new board last October, the government had sought immunity for the newly-appointed six directors of the group from any legal action against them for the past deeds of old directors.

“We are issuing a direction that for the past actions of the suspended directors or any of the officers of the company and the past wrongs of the suspended directors and its officials, no action should be initiated against the newly-appointed director, without prior approval of the tribunal,” the NCLT Mumbai had said in an interim order on Oct. 5.

The government’s move came after it felt that the Uday Kotak-led board should be protected from any legal hurdles in executing its task of finding a “fair value and resolution” for the debt-laden company.

Following this, the Corporate Affairs Ministry on Monday moved the Mumbai NCLT seeking protection for these directors of group entities.

Meanwhile, IL&FS has also filed an application seeking dispensation from appointing independent director on the group companies.

A two-member NCLT bench of VP Singh and Ravikumar Duraisamy scheduled both the matters for detailed hearing on April 12.

The government has appointed an eight-member board headed by banker Uday Kotak to steer the IL&FS group out of the crisis after it began to default payments due to severe cash crunch since late August.

The government superseded the previous board on Oct. 1, 2018.

The government expects a resolution to the crisis over the next four-five months.

The IL&FS group has 348 subsidiaries and together they owe over Rs 94,000 crore to a clutch of commercial banks mostly state-run lenders and other financial institutions.

Also read: RBI Seeks Modification Of NCLAT Order On NPA Status Of IL&FS