The Corporate Affairs Ministry on Thursday moved the National Company Law Tribunal (NCLT), seeking to reopen the books of IL&FS Group and its subsidiaries for the past five years under Section 130 of the Companies Act, to ascertain financial mismanagement.
This is the first time that the government has invoked the powers under Section 130 of the new Companies Act of 2013 to reopen the ledgers of a company.
The government wants to check the balance-sheets of crippled group entities and the two listed subsidiaries — ITNL and IL&FS Financial Services — for the past years and the move comes after the Serious Fraud Investigation Office (SFIO) found shocking details of corruption, personal enrichment and other non-transparent deals.
The NCLT, however, refused to pass an immediate order saying it had to seek the views of the relevant statutory bodies and regulators such as the Reserve Bank, SEBIand the Income Tax Department, before taking a call on the petition.
Hearing on Jan. 1
The two-member bench of judges V.P. Singh and Ravikumar Duraisamy said they would issue the notices on Friday and hear the matter when the court reopens on January 1, 2019.
The ministry also submitted a report on the views of the Institute of Chartered Accountants on the IL&FS Group’s accounts, which were audited by Deloitte, EY affiliate SRBC and KPMG affiliate BSR.
The government plea also wants NCLT to appoint an independent chartered accountant to take restate the accounts and revise the balance-sheets of IL&FS, IL&FS Financial Services and IL&FS Transportation Network and wants three months to do the job. The group owes over ₹94,000 crore to lenders, mostly banks.
Meanwhile, the bench approved the appointment of two new directors to the board of IL&FS Financial Services.
Former bureaucrat Vijay Kumar and senior chartered accountant N. Srinivasan have been appointed as non-executive directors after G.N. Bajpai resigned from the board within a month of government appointing him in October.
With this, there are eight non-executive directors on the IL&FS board, including chairman Uday Kotak.