Mumbai: The ministry of corporate affairs on Monday welcomed the NCLAT stay on all the proceedings against debt-laden IL&FS and other group companies and said the priority is to pay salaries and complete ongoing projects, rather than repaying large debt.
The National Company Law Appellate Tribunal (NCLAT)'s order came Monday over an urgent petition moved by the ministry after the Mumbai bench of NCLT had turned down its plea for a 90-day moratorium over the loans taken by the IL&FS and its subsidiaries.
IL&FS and its subsidiaries have defaulted on several debt obligations recently and is sitting on over Rs 91,000 crore of long and short-term debt.
"IL&FS has to be run and the required funding should be given. It has nearly 4,500 employees, who need to be paid salaries. It has also taken projects both in India and abroad. We need to fulfil all obligations of critical projects or legal issues will arise. After that only we can talk about repayment, that too on the basis of seniority," corporate affairs secretary Injeti Srinivas told reporters here.
"If we use liquidity for repayment, then we can't go forward. Therefore, the moratorium is needed and NCLAT has given us a temporarily relief," he said.
The government had requested NCLAT to restrain other creditors of IL&FS from filing suits in the case of non-repayment of loans.
"We got the relief we wanted. It heard our petition and considered both the economic as well as public interest involved in IL&FS. It has stayed the NCLT order and as an interim measure, have approved all our prayers including that of a moratorium," said Srinivas.
Srinivas, who was talking to reporters on the sidelines of a roadshow on competition law jointly organised by fair trade authority CCI and industry lobby CII, said SFIO will look into allegation of corporate fraud and syphoning of the money by the past management of IL&FS. The ED will also step in if money laundering is found.
Asked on why nominee directors were not made respondents, Srinivas said, "Because we thought the question of fit and proper assessment will not apply to them at this stage."
Replying to a query on finding the right suitor, Srinivas said that nobody is going to take IL&FS as a group enterprise.
"There could be companies which can be sold as going concerns, there could be assets, which could go as slump sale and there could be certain which wound up and undergo liquidation. So, we have a multi-pronged approach," he said.
After the government took over the management of cash-strapped IL&FS early this month, the newly appointed board in its second meeting last week had initiated austerity measures for personnel and operating expenses.
The seven-member board, headed by veteran banker Uday Kotak, also appointed nominee directors for eight of IL&FS' subsidiaries.
Commenting on the new IL&FS board, Srinivas said they have slowly and steadily taken all the decision to address the problems.
"The board has decided to have a core committee along with some core employees of the company at a critical management level. They have also decided to see how they can firm up figures with respect to valuation of assets, secured and unsecured loans, what are related party transactions and other issues," he added.
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