NCLAT offers IL&FS Sec MD monthly Rs 2 lakh withdrawal but upholds NCLT asset-freeze order

The National Company Law Appellate Tribunal (NCLAT) has allowed one of the senior officials of IL&FS, S Rengarajan, to withdraw Rs 2 lakh per month.

Rengarajan, MD of IL&FS Securities, had moved the NCLAT against the NCLT’s December 3 order barring senior officials of IL&FS from “selling, pledging or creating any third party rights on their movable and immovable assets”.

The court had also directed them to disclose their securities and bank accounts within the country and overseas.

The NCLAT upheld the NCLT order but allowed Rengarajan to withdraw Rs 2 lakh monthly from his accounts.

Previously, the NCLT had passed a similar order for PNB, after the $2 billion fraud, barring independent directors from selling their assets.

On the same day, the government-appointed board of IL&FS also unanimously approved the suspension of Rengarajan from the board of IL&FS Securities.

Besides Rengarajan, the executives whose assets were attached by the NCLT on December 3 include RC Bawa, Managing Director of IL&FS Financial Services; Pradeep Puri, Director and member of Committee of Directors responsible for sanctioning loans; and Mukund Sapre, Executive Director of ITNL. Ravi Parthasarathy, Hariharan and Arun Saha are the three other former directors whose properties have been seized.

Infrastructure financier IL&FS, which has racked up a debt of about Rs 92,000 crore, defaulted on interest payments in September, sparking fears of a contagion in the system.

The government, which has started several probes into the company, has said the case goes beyond mere failure and there is evidence of institutional fraud.

"IL&FS used a circuitous way to pay off loans of its own entities to meet RBI guidelines and used this method to obtain a high credit rating, and high managerial remuneration,” the government counsel argued in court recently.

At the same time, senior executives -- such as IL&FS Chairman Parthasarathy, whose remuneration increased 144 percent in FY18 – have been accused of enriching themselves unfairly at the cost of the company and junior employees.