NCLAT Clears Path for Canara and Indian Banks in IL&FS Proceedings

The NCLAT has permitted Canara and Indian Banks to pursue legal action against former IL&FS directors not on the new board. Protective measures will remain for directors appointed after October 1, 2018. This decision comes amid ongoing evaluations of IL&FS's substantial financial obligations and past leadership decisions.

The National Company Law Appellate Tribunal (NCLAT) has ruled in favor of Canara Bank and Indian Bank, allowing them to proceed against former directors of Infrastructure Leasing & Financial Services (IL&FS) who are no longer part of the new board. This move aims to classify the ex-directors as wilful defaulters.

Protection, however, remains intact for those directors appointed to IL&FS and its subsidiaries' boards after October 1, 2018. The NCLAT bench led by Chairperson Justice Ashok Bhushan emphasized that professional directors who have been reappointed in the current IL&FS board would continue to receive protection from legal proceedings.

This development follows a significant overhaul of IL&FS management, initiated by the government after a debt crisis amounting to Rs 90,000 crore was uncovered. The financial turbulence sent shockwaves throughout the country's economic sector. The NCLAT's decision reflects ongoing attention to the case, balancing legal accountability with economic stability.

(With inputs from agencies.)