The National Company Law Appellate Tribunal (NCLAT) on Friday suggested that all further proceedings for transfer of assets of crisis-hit IL&FS should take place under the supervision of a retired Supreme Court judge.
The new management of the Infrastructure Leasing and Financial Services Ltd (IL&FS) is considering assets sales to bail out the company from its financial mess and pay back to its lenders over Rs 90,000 crore.
"As it appears that a process required to be followed, similar to corporate insolvency resolution process, for the purpose of proper resolution of IL&FS and its subsidiaries," said a two-judge bench headed by Justice S.J. Mukhopadhaya.
It added that in such a case, a committee of creditors (CoC) may be required to be formed for determining "viability, feasibility and financial matrix of the plan or offer, if any, given by one or other party for acquisition of one or other group companies or its assets".
"In such case, parties are directed to address as to why this appellate tribunal will not direct that while matter to be supervised by a retired Supreme Court Judge," the appellate tribunal said.
Meanwhile, the NCLAT also clarified that "IL&FS and its board may be allowed to proceed with the matter".
The NCLAT also directed IL&FS to submit all details of the arbitration proceedings going against it and its 348 group companies.
"IL&FS' will provide the details of arbitral proceedings filed by it or by any of its Group Companies or filed against IL&FS' or any of its Group Companies by the next date," said the NCLAT.
The two-member bench also said that the pending arbitration proceedings against IL&FS and its subsidiaries companies would proceed but the order would be kept in a sealed cover.
"So far as the pending arbitration proceedings are concerned, if any pending before one or other Arbitral Tribunal in which the IL&FS' or any of its 348 Group Companies are parties, in such case, the Arbitral Tribunal may proceed with to determine the claim and counter claim, if any, made by the parties and may pass the award, and keep it in a seal cover," the appellate tribunal said.
It further said: "The arbitral tribunal is also prohibited to pass any order under Section 17 of the Arbitration & Conciliation Act, 1996 against 'IL&FS' or any of its group companies. Sealed cover will be kept till the final decision of the petition under Sections 241 & 242 of the Companies Act, 2013 pending before the National Company Law Tribunal, Mumbai Bench."
However, it also added that "if the award is given in favour of the 'IL&FS' or any of its group companies, in such case, the award need not be kept in a sealed cover, even during the pendency of the company petition."
The NCLAT directed to list the matter on January 28 for next hearing, when it would hear the matter of granting moratorium to IL&FS and group companies.
The appellate tribunal was hearing a petition filed by the Ministry of Corporate Affairs (MCA) and IL&FS.
Earlier, passing an order on January 1, 2019, NCLT had permitted the government to reopen and recast the accounts of IL&FS and its subsidiaries, IL&FS Transportation Network Ltd and IL&FS Financial Services, for the past five years.
On October 15, NCLAT had stayed all proceedings against IL&FS group and its 348 firms till its further order, over an urgent petition moved by the government.
The Ministry of Corporate Affairs (MCA) had approached the appellate tribunal after the Mumbai bench of national company law tribunal (NCLT) turned down its plea to grant 90-day moratorium.
This matter is scheduled to be heard on January 28 for hearing.
The NCLT had on October 1 suspended the board of IL&FS on government's plea and authorised reconstitution of the board by appointing seven directors two days later.