NCLAT stays proceedings against IL&FS, group firms
INTERIM RELIEF Lenders asked to submit replies over govt’s moratorium petition NEW DELHI:The
National Company Law Appellate Tribunal (NCLAT) on Monday stayed all proceedings against IL&FS and other group companies till its further order. The appellate tribunal order came over an urgent petition moved by the ministry of corporate affairs after the Mumbai bench of National Company Law Tribunal (NCLT) had turned down its plea for 90 days moratorium over the loans taken by the IL&FS and its subsidiaries.
A two-member NCLAT bench headed by justice SJ Mukhopadhaya has asked the top five lenders of IL&FS to submit their replies over the government’s plea for 90 days moratorium.
“Until further orders there should be stay of any proceedings by any parties against IL&FS and its 348 subsidiaries in any court of law or tribunal,” said NCLAT.
The appellate tribunal has directed to list the matter on November 13 for next hearing.
The government had requested the NCLT to restrain other creditors of IL&FS from filing suits, in the case of non-repayment of loans.
IL&FS’s lawyer argued the company would face 70 to 80 legal suits across the country if the moratorium was not granted.
This moratorium would help the new board to create a speedier resolution plan for the debt-laden company. Meanwhile, the ministry of corporate affairs on Monday welcomed the NCLAT stay on all the proceedings against IL&FS and other group companies and said the priority is to pay salaries and complete ongoing projects, rather than repaying large debt.
IL&FS and its subsidiaries have defaulted on several debt obligations recently and is sitting on over ₹91,000 crore of long and short-term debt.
“IL&FS has to be run and the required funding should be given. It has nearly 4,500 employees, who need to be paid salaries. It has also taken projects both in India and abroad.
We need to fulfil all obligations of critical projects or legal issues will arise. After that only we can talk about repayment, that too on the basis of seniority,” corporate affairs secretary Injeti Srinivas told reporters in New Delhi.
“If we use liquidity for repayment, then we can’t go forward. Therefore, the moratorium is needed and NCLAT has given us a temporarily relief,” he said.
“We got the relief we wanted. It heard our petition and considered both the economic as well as public interest involved in IL&FS. It has stayed the NCLT order and as an interim measure, have approved all our prayers including that of a moratorium,” said Srinivas. Srinivas, who was talking to reporters on the sidelines of a roadshow on competition law jointly organised by fair trade authority Competition Commission of India and industry lobby Confederation of Indian Industry, said the Serious Fraud Investigation Office will look into allegation of corporate fraud and syphoning of the money by the past management of IL&FS. The Enforcement Directorate will also step in if money laundering is found.
Asked on why nominee directors were not made respondents, Srinivas said, “Because we thought the question of fit and proper assessment will not apply to them at this stage.” Replying to a query on finding the right suitor, Srinivas said that nobody is going to take IL&FS as a group enterprise.
Commenting on the new IL&FS board, Srinivas said they have slowly and steadily taken all the decision to address the problems.