Govt takes over debt-laden IL&FS
New Delhi: In a significant decision aimed at preventing any more defaults in payment of loans by debt-ridden IL&FS, the non-banking financial company, the National Company Law Tribunal (NCLT) on Monday ordered the suspension of the IL&FS board and allowed a six-member government-appointed team to take control of the debt-ridden company.
The decision in this regard was taken on Monday after the Ministry of Corporate Affairs approached Mumbai-bench of NCLT to allow the government to take over the board of IL&FS by constituting a new board.
The tribunal said that the new board for IL&FS or Infrastructure Leasing & Financial Services would take over immediately. The government had sought approval of NCLT to suspend the existing board of IL&FS citing "continuity of current board prejudicial to the public interest". The new IL&FS board will have six members, including eminent banker Uday Kotak as non-executive chairman.
Other members of the new board include are Vineet Nayyar, IAS (retd), GN Bajpai, former Chairman, SEBI, GC Chaturvedi, non-executive chairperson, ICICI Bank, Malini Shankar (IAS) and Nand Kishore, a senior bureaucrat from CAG as directors.
In a statement issued by the Ministry of Corporate Affairs, it has been stated that the move was essential to restore confidence in the financial market and hoped that financial institutions would provide the NBFC liquidity.
The newly constituted board will meet by October 8. The new board members have been given the liberty by the bench to elect a chairperson from among themselves unanimously, it said, adding that the bench has set October 31 as the next date of hearing and directed IL&FS to respond to all points raised by the government in its plea by October 15.
The suspended management cannot represent the company anywhere, the tribunal noted. IL&FS has a debt pile of over Rs 91,000 crore. Key IL&FS shareholders include Life Insurance Corporation (LIC), State Bank of India (SBI) and Central Bank of India, with the insurance major being the largest shareholder owning a 25.34 per cent stake.
