The union government has moved the National Company Law Tribunal (NCLT) in Mumbai seeking ‘special dispensation’ for the newly re-constituted board of debt laden IL&FS, including picking a managing director and replacing the board of its subsidiaries without following some of the regulatory requirements and procedural aspects of the Companies Act.

The move is aimed at finalising a quick resolution plan for the firm, which has 348 entities under its fold against 169 disclosed earlier. The Mumbai bench of the NCLT on Monday reserved its order on the request put forth by the Union government through its Counsel.

Dispensing with the regulatory and procedural requirements would help the board “salvage the situation, set right the things and present a resolution plan to the Tribunal”, the Counsel for the government said. “The whole effort of the union government (to turnaround the company) will hinge on this,” the Counsel for the union government submitted before NCLT. “Otherwise, no eminent persons will come forward and take control of the company,” he added.

The Counsel submitted that appointing a veteran managing director to run the affairs of the company and overhauling the board of some 348 downstream subsidiaries would be a time-consuming process since this requires shareholders’ approval, convening a general body meeting and issuing notices.

The move of IL&FS board to name Vineet Nayyar, 80, as the managing director is also entangled in an age issue because the companies Act has prescribed an age limit of 75 years for persons to hold office of managing director.

Seeking exemptions from the application of regulatory requirements and procedural aspects of the Companies Act, the Union Government’s Counsel said that this would help in changing the board of downstream subsidiaries and appointing a managing director. This issue has become critical because around Rs 4,000 crore of exposure would become due in a month.

“The government has unshackled the board of IL&FS so that it can move quickly without any apprehensions and take decisions in public interest. Otherwise, it will become very incongruous”, the Counsel said. “If any of the eminent persons appointed to the board of IL&FS were to step down due to some apprehensions, the whole effort of the government will go waste,” he said.

The NCLT observed that the newly appointed board of IL&FS can exercise powers that were exercised by the earlier board as per the Companies Act, adding that it “will consider the matter”.

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