Indian Overseas Bank issues show cause notice to IL&FS Engineering

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IL&FS Engineering Services on Monday said it has received a show cause notice from Indian Overseas Bank (IOB) for reviewing the classification of the company's loan account as a suspicious fraud account.

Facilities involved for Rs 123 crore, though irregularities have not been quantified by the lender, IL&FS Engineering said in a regulatory filing.

This was first observed by Grant Thornton India in their forensic audit report and was duly reported to MCA for appropriate action, it said.

As per the directions of NCLT on October 1, 2018, the reconstituted Audit Committee of new Board comprising nominated directors of Ministry of Corporate Affairs had conducted a special audit (held as Forensic Audit') for all high-value transactions undertaken by IL&FS Ltd (IL&FS) and a few of its group companies which included IL&FS Engineering through Grant Thornton India LLP, it said.

Accordingly, as a natural corollary of the IL&FS crisis, the then loan accounts, maintained with various secured lenders including IOB by the company, being a subsidiary of IL&FS were classified as fraud, it said.

The company's liabilities to all secured lenders including IOB are being addressed as part of the ongoing Group resolution framework approved by the NCLAT and currently being implemented, under the supervision of Retired Supreme Court Judge - Justice D K Jain, by the government-appointed new public board, it said.

Shares of the company surged by 2.89 per cent to close at Rs 37 per share on BSE on Monday.