The government moved the Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday seeking to appoint Vijay Kumar and N. Srinivasan to the board of debt-laden Infrastructure Leasing and Financial Services Ltd (IL&FS). However, the tribunal directed the government— represented by the ministry of corporate affairs (MCA)—to seek the approval of the newly appointed board before approaching the tribunal for its approval.
“We want the tribunal to approve the appointment of retired IAS officer Vijay Kumar to the board of IL&FS, who will be the replacement of G.N. Bajpai as executive director of the company,” argued S. Ramakant, joint director of MCA. “We are also seeking the appointment of N. Srinivasan as a non-executive director on the board of the company. He is a veteran chartered accountant and his knowledge and experience will help the board immensely,” said Ramakant.
NCLT, presided over by V.P. Singh and Ravikumar Duraisamy, asked how a tribunal could pass such an order without the approval of the existing board.
“As the old board was superseded and the new board has taken over as the in- charge of the respondent number one (IL&FS), any new appointment on the board needs to come to the tribunal after such resolution passed by the new board,” said the tribunal in its oral order.
The tribunal asked the MCA representative to submit a board resolution for fresh appointments.
Later, the MCA joint director sought three days’ time to get such an approval from the board. This was granted by the tribunal, and the matter will be heard next on Friday.
On 1 October, NCLT had approved the petition of the government to replace the erstwhile board of IL&FS with a new board led by Uday Kotak. It had also initiated a probe by the Serious Fraud Investigation Office into the financials of the company.
The government also informed the tribunal of the proposed stake sale of IL&FS in two of its clearing corporations.
IL&FS has accumulated a debt of more than ₹91,000 crore and has defaulted on some of its commitments.
However, a proxy advisory firm had raised concerns over the inclusion of G.J. Bajpai on the seven-member board. The proxy advisory report said that the SFIO had flagged a case of conflict of interest against Bajpai, a former chairman of the Securities and Exchange Board of India, when he was an independent director on the board of the now-defunct Kingfisher Airlines.
In November, Bajpai had stepped down from the IL&FS board citing a personal reason.
The six-member IL&FS board is chaired by Uday Kotak, managing director and chief executive officer of Kotak Mahindra Bank Ltd. The other members of the board are ICICI Bank Ltd chairman G.C. Chaturvedi, Malini Shankar, Vineet Nayyar, Nand Kishore and C.S. Rajan, all former IAS officials, Vineet Nayyar, former vice chairman of Tech Mahindra, Malini Shankar and Nand Kishore.