Based on an urgent petition moved by the ministry of corporate affairs (MCA), the National Company Law Appellate Tribunal (NCLAT) on Monday stayed all proceedings against IL&FS and its 348 group firms till a further order.
The ministry had moved the NCLAT after the Mumbai bench of the National Company Law Tribunal (NCLT) turned down its plea to grant a 90-day moratorium over the loans taken by IL&FS and its subsidiaries.
Meanwhile, the Saudi Arabia-based Islamic Corporation for the Development of the Private Sector (ICD) on Monday said it had halted plans for a $1-billion fund with IL&FS while it undergoes a restructuring.
In January, ICD had signed a shareholder agreement with the private equity arm of IL&FS to launch an Africa-focused infrastructure fund with $105-million seed capital and a target first close by the middle of the year. “After a careful review of the recent development on IL&FS, we have decided to put this project on hold,” ICD, the private sector arm of Islamic Development Bank Group, said in a statement to Reuters.
Staying the NCLT order, a two-member NCLAT bench headed by Justice SJ Mukhopadhaya stayed all the proceedings “taking into consideration the nature of the case, larger public interest and economy of the nation and interest of IL&FS and 348 group companies”.
The appellate tribunal also directed to implead the top five lenders of IL&FS and asked to submit their replies over the government’s plea seeking 90 days moratorium.
“There shall be stay of the institution or continuation of suits or any other proceedings by any party or person or bank or company, etc against IL&FS and its 348 group companies in any court of law/tribunal/arbitration panel or arbitration authority,” the appellate tribunal said.
There would also be a stay on “any action by any party or person or bank or company etc to foreclose, recover or enforce any security interest created over the assets of IL&FS and its 348 group companies including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002”.
The appellate tribunal has also put suspension of temporarily the acceleration of any term loan, corporate loan, bridge loan, commercial paper, debentures, fixed deposits and any other financial facility by the IL&FS and its 348 group companies. It has also stayed all banks, financial institutions from exercising the right to set off or lien against any amounts lying with any creditor against any dues.
The appellate tribunal has directed to list the government’s appeal on November 13 “for admission”.
Meanwhile, the NCLAT also clarified that the interim order will not be applicable to any writ petition filed before high courts or the Supreme Court.
The government had stated that the newly appointed board is “likely to face certain problems” relating to IL&FS and its group company and there may be a need to “rationalise or rethink” business process and strategies that may ensure effective and more efficient manner of functioning.
It had further contended that the newly elected board required “status quo to be preserved qua the business and assets” of IL&FS and group companies.
