Infrastructure Leasing & Financial Services (IL&FS) has approached the National Company Law Tribunal (NCLT) seeking recovery of Rs 185.88 crore “excess managerial remuneration” paid to its former directors and those of two group companies following the recasting of financial statements for five financial years, between 2013-14 and 2017-18.
In an application filed before the Mumbai Bench of the NCLT, IL&FS has sought directions to its former directors and two key subsidiaries, IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL), to return the excess remuneration.
The company has sought an interim direction requiring the identified former directors “to deposit the excess managerial remuneration/undue gains in a separate interest-bearing fixed deposit account”, during the pendency of the hearing before NCLT.
Scam-hit IL&FS said it paid remuneration to its erstwhile directors based on profits shown in the original accounts. However, when those accounts were later recast following NCLT directions, they showed losses.
The recast accounts showed that IL&FS actually had a cumulative loss of Rs 9,415.24 crore from FY14 to FY18 against a reported profit of Rs 1,865.73 crore. IFIN’s loss was Rs 5,655.22 crore against a profit of Rs 1,015.67 crore, while ITNL’s loss was Rs 1,628.44 crore against a profit of Rs 1,246.33 crore.
The Ministry of Corporate Affairs had directed it to recover the excess remuneration paid, following which it had issued notices to all 23 erstwhile directors.
However, they have raised objections, said IL&FS, adding that despite multiple notices and reminders, no refund has been made by any of the former managerial personnel.
So far, only three former non-executive directors, two of IL&FS and one of ITNL, have refunded money. Of the Rs 187.02 crore refundable in total, only Rs 91.09 lakh (net of Rs 22.78 lakh paid as income tax) has been refunded so far, “less than 0.5 per cent” of the amount, the application said.
In the application filed before NCLT earlier this week, it has named all 23 former directors as respondents.
The list of former directors named in the recovery proceedings includes several prominent independent directors, such as RC Bhargava, Jaithirth Rao, Michael Pinto, SB Mathur and Rina Kamath of IL&FS; Subhalakshmi Panse, Surinder Singh Kohli and Neera Saggi of IFIN; and Deepak Dasgupta and Pradeep Puri of ITNL.
The application also names former executive directors, including Hari Sankaran, Arun Kumar Saha, Ramesh Bawa and K Ramchand. In the case of former IL&FS Chairman Ravi Parthasarathy, who has since died, the recovery claim has been initiated against his legal heir.
IL&FS said recovery from managing directors, whole-time directors, managers and CEOs is being pursued under Section 199 of the Companies Act, while Section 197(9) obligates “any director”, including non-executive and independent directors, to refund sums drawn beyond prescribed limits.
The former directors, it said, have disputed the notices on grounds including that the recast financials cannot retrospectively invalidate pay approved under duly audited original accounts, that the recast accounts are not audited statements and that the notices are vague because amounts differed between the first and later notices.
IL&FS termed these responses “baseless, unwarranted, and without any semblance of merit” and said the discrepancy was a calculation variation that has since been corrected.
As of October 2018, IL&FS Group had availed fund-based debt of Rs 94,215 crore out of total external debt outstanding of Rs 99,355 crore. Of this Rs 48,000 crore, almost 51 per cent was availed by 4 key holding companies: IL&FS Group, IFIN, ITNL, and IEDCL.
IL&FS Group is resolving the debts through monetisation and termination/settlement of payments by its entities from the concessioning authorities and counterparty to the relevant contract. It has maintained an overall debt resolution target of Rs 61,000 crore.
IL&FS’ new board has so far executed steps to resolve about Rs 50,387 crore of group debt as on June 30, 2026.
On October 1, 2018, NCLT superseded IL&FS’s existing board on the centre’s recommendation after the mega-crisis in IL&FS, which shook the finance industry.
A new board for IL&FS was appointed to take charge of its affairs, and NCLAT conceived a framework to resolve the crisis-hit group.
It had also granted protection to the IL&FS Companies against recovery of any further dues and immunity to the newly appointed Directors of IL&FS against any proceedings for the past actions of suspended Directors or any of the officers thereof.