NCLAT allows banks to proceed against former IL&FS directors not part of new board

NEW DELHI, (RNS, 08-04-25): The National Company Law Appellate Tribunal (NCLAT) has allowed state-owned Canara Bank and Indian Bank to pursue proceedings against former IL&FS directors, who are not part of the new board, to declare them as wilful defaulter.

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However, the appellate tribunal said those directors who are part of the new board of Infrastructure Leasing & Financial Services (IL&FS) and its various subsidiaries after October 1, 2018, would remain protected.

“We are of the view that this protection shall extend to Professional Directors who have been reappointed in IL&FS and its subsidiaries who are the part of the present board. With respect to IL&FS and IL&FS Group. We grant leave to the bank to make an application for proceeding against them,” said a two-member NCLAT bench comprising Chairperson Justice Ashok Bhushan and Member Barun Mitra.

The government had appointed a new board of IL&FS after October 1, 2018, after a Rs 90,000 crore debt surfaced, which had then sent shock waves to the financial sector of the country.