Mumbai: Challenging last week’s order of the dismissal of the moratorium plea for Infrastructure Leasing and Financial Services (IL&FS) Ltd and its 348 subsidiaries, the government has moved to the National Company Law Appellate Tribunal (NCLAT) said two people familiar with the development.
The Mumbai bench of the National Company Law Tribunal (NCLT) has rejected the government’s plea to grant moratorium for IL&FS and its 348 subsidiaries by any lender of the group or its subsidiaries.
“The Ministry of Corporate Affairs has moved to the NCLAT on Sunday itself and the hearing is slated to come up today,” said one of person quoted above. “We have burn lots of midnight oil to draft the petition and we do believe that we have case here,” said the second person close to the development.
The tribunal, presided by over V.P. Singh and Ravikumar Duraisamy, ruled in its order that some of the group companies of IL&FS are already undergoing Corporate Insolvency Resolution Process (CIRP).
“The bench is of the opinion that under IBC, for each company an application has to be made to initiate CIRP and a blanket moratorium order cannot be pass against all 348 companies in the absence of 348 petitions/applications,” ruled the tribunal in its 12-page order it passed during the weekend.
The government on Friday had moved to the NCLT seeking a three-month moratorium from legal proceedings in any court against IL&FS and its 348 subsidiaries by any lender of the group or its subsidiaries.
The government argued that when it is working on the revival of IL&FS, having around 70-80 cases against the group in multiple jurisdictions across the nation will 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 out that IL&FS has 348 subsidiaries, joint ventures and other affiliates and 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 (MCA). “We need breathing space and a certain time of calm to see the full picture of the company.”
The government also argued that the Serious Fraud Investigation Office (SFIO) and other government agencies are investigating the affairs of the group and that if the new board has to face several cases, it will be difficult to come out with the revival plan for a group of this size.
“Our prayer is limited for 90 days and not for an infinite time, which may be prejudicial to any lender or stakeholder of IL&FS,” said Shorey. “The tribunal has given the shield to the new board and now it must provide wings to fly towards the revival.”
However, Aditya Birla Finance Ltd, which has an exposure of Rs150 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 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.
IL&FS has debts of over Rs 91,000 crore.