Saturday, January 16

IK&FS crisis: NCLT asks former directors of IL&FS to disclose assets


By Ashwin Manikandan & Shilpy Sinha

MUMBAI: The National Companies Law Tribunal today passed an interim order asking nine directors of debt ridden Infrastructure Leasing & Financial Services (IL&FS) including Ravi Parthasarathy and Hari Sankaran, Arun K Saha to disclose details of their movable and immovable assets, bank account, jointly held assets in next three weeks.

The government had today filed a petition seeking attachment of properties of additional directors of IL&FS including chief investment officer and chairman of welfare trust Vibhav Kapoor, MD IL&FS Transport Network K Ramachand, MD of IL&FS Financial Services R C Bawa, director and member of committee of ITNL Pradeep Puri, MD and CEO IL&FS Securities S Rengarajan and Executive director ITNL Mukund Sapre. The list includes Hari Sankaran Vice chairman, Ravi Parthasarathy Chairman and Arun K Saha Joint MD and CEO.

These people have also been restrained from mortgaging, or third-party interests or in any way alienating movable or immovable or jointly held properties. Above mentioned respondents are also restraints from dealing in securities in any companies till the order. The next hearing is scheduled on January 16, 2019.

“Taking in view of the interim report, we pass an order relating to respondent 2, 3, 9 313-318 to disclose their movable and immovable properties anywhere in India or the world in the way of an affidavit,” said the two-bench judge V P Singh and Ravi Duraisamy.

The government counsel Sanjay Shorey argued that the key individuals named in the petition were the decision makers and “controlling will and mind” for most of the other group companies especially at the direct subsidiary level or companies having substantial operations and employees welfare trust. He argued that Ravi Parthasarathy who acted as chairman between 1989 to 2017 was tightly controlling IL&FS and its subsidiaries. Most of them were at the helm of affairs for 20-25 years in the company, he said. The counsel had sought to freeze all assets, securities, lockers, bank accounts of key directors.

Initially when the revival plan was given, the case was against 348 subsidiaries while in today’s interim report, ministry of corporate affairs pointed out that there were only 301 companies.

In this dramatic period, these companies are either not part of IL&FS group or have ceased to exist. To this, V P Singh and Ravi Duraisamy asked the government counsel to present details about the companies that have ceased to be part of the group since October 1, when the matter was first presented before the board.

The counsel said that to show profitable accounts, get access to market funds, avoid credit rating downgrade at holding companies and immediate subsidiaries levels were hiding depleted financial conditions. Also, it was to ensure higher remunerations for key staffs including Parthasarathy, said the MCA counsel Shorey. Remuneration of Parthasarathy rose 144% while the average increase in salaries of employees was just 4.4%.

Serious Fraud Investigation Office is investigating these key executives. In the interim report submitted on November 30,2018, SFIO has indicated how siphoning and divergence of funds were taking place.

Senior Counsel Fredun De Vitre appearing on behalf of Hari Sankaran said that it is more liquidity crunch issue and to allege fraud is a huge mistake as project gestation period is long. “I want to dispel the notion that Rs 91,000 crore in debt reflected in Rs 1 lakh crore asset.”

IL&FS submitted progress report of last 1 month and 23 days to the bench. In the report, it said that it has initiated process to sell the securities business along with wind energy to raise funds.


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