The government has sought immunity for the new board of Infrastructure Leasing & Financial Services (IL&FS) from any civil or criminal proceedings for decisions and actions taken by the ousted board. Counsel for the Ministry of Corporate Affairs (MCA) has petitioned the National Company Law Tribunal (NCLT), Mumbai, to this effect.
In the Satyam scam as well, the erstwhile Company Law Board (CLB) had provided similar immunity to the new board. At that point, the CLB had observed that since the appointment of the new board was approved by it, its members would be like court officers. It had ordered that no punitive action against the new board of Satyam could be taken.
On Monday, the government superseded the board of the debt-laden conglomerate and put in place a seven-member team headed by Uday Kotak.
The government will look into the role of audit and risk management committees set up by the previous board as the investigation progresses. The risk management committee of IL&FS had met only once in the last four years.
Ministry officials said the former board members had assured them that they would try to sort out the problems of the company without government intervention. However, the government lost confidence in the previous management, they added.
The officials said the government would make sure that public infrastructure projects where IL&FS was involved did not come to a standstill. While the government would take to task anyone guilty of bringing the company to this state, it would ensure that there was no liquidity crisis, they said. The MCA approached the NCLT, Mumbai, under sections 241 and 242 of the new Companies Act to supersede the previous board with the new one.
The Section 241 empowers the government to approach the tribunal if it thinks the company concerned is not being run in public interest. The other section talks about what the NCLT can do.
The ministry had said in its petition that IL&FS had 169 group companies under its structure. The new board, however, said the group comprised 348 entities, which was “significantly larger than what we had originally been aware of”.
The new board is undertaking a process to ensure that the value of the group is preserved.