The Ministry of Corporate Affairs (MCA) has requested the National Company Law Tribunal (NCLT) to relax rules for speedier resolution of the Infrastructure Leasing & Financial Services (IL&FS) debt crisis.
However, the NCLT judge observed that the Companies Act does not permit an exemption from procedure. The tribunal is yet to pass its final order in the case.
The MCA’s request for an expedited resolution process was based on three factors. The first one involved the appointment of Vineet Nayyar as Managing Director (MD) of IL&FS.
Since Nayyar is 80 years old, his appointment would have to be done through the approval of a special resolution, which is necessary for the appointment of anyone above 75 years of age as MD.
The MCA’s counsel Manmohan Juneja argued that the completion of "all procedures will take lot of time, which will derail the resolution plan”.
Juneja also said that the MCA had put in a lot of effort to get an eminent personality on IL&FS’ board and that if any person were to step down now, all the effort will have been in vain.
To convene a general body meeting, which would be necessary for the appointment of an MD, the company would need to give 21 days’ notice to its shareholders, who will then have to approve it.
The second factor behind the MCA’s request was the supersession of the boards of all 348 of IL&FS’ subsidiaries.
Juneja said that the ministry needed directions to supersede the subsidiaries’ boards for fruitful result in lesser time.
The judge said that if the erstwhile management of IL&FS had the power to supersede the boards of the company’s subsidiaries, the new management will also have that power.
The third factor behind the MCA’s request for an expedited resolution process was that IL&FS’ needs to repay nearly Rs 4,000 crore of debt over the next 30 days.
The ministry has also requested NCLT to exempt the new board from any regulatory action, or action from state authorities and agencies.>