New Delhi - The government moved the National Company Law Tribunal (NCLT) for change of management at the crisis-hit IL&FS on October 1, which allowed the Centre to reconstitute the IL&FS board.
A Mumbai bench of judges M.K. Shrawat and Ravikumar Duraisamy approved the takeover of IL&FS board by government nominees, saying the mismanagement at the crisis-ridden IL&FS made the present case a fit one for invoking Article 241 (2) of the Companies Act-2013 that provides for the suppression of the existing board.
The bench said going by the Centre’s petition, it was apparent that the “affairs of IL&FS were being conducted in a manner prejudicial to public interest”. It, thus, approved the Centre’s proposal to let a six-member team take over the IL&FS board.
These six members are Uday Kotak of the Kotak Mahindra Bank, retired IAS officer Vineet Nayyar, former Sebi chairperson G.N. Bajpai, ICICI’s non-executive chairperson G.C. Chaturvedi, IAS officer Malini Shankar and senior bureaucrat from CAG Nand Kishore.
Debt defaults by certain group entities of diversified IL&FS have triggered fears of liquidity crisis in the financial markets and the RBI has been taking steps to improve the overall cash situation.
The key shareholders of IL&FS include LIC, SBI and Central Bank of India. Shares of the IL&FS group companies surged up to 20 per cent on October 1 on news of the government move and NCLT approval.
The scrip of IL&FS Engineering and Construction Company surged 20 per cent, IL&FS Transportation Networks shares zoomed 19.51 per cent and IL&FS Investment Managers soared 10 per cent on BSE.