SC sets aside NCLAT nod to Byju’s settlement with BCCI
Observing that the NCLAT did not apply its mind while delivering the impugned decision, the apex court directed a fresh adjudication on the insolvency proceedings.
The National Company Law Appellate Tribunal (NCLAT) on Thursday allowed the banks to declare as non-performing assets the accounts of IL&FS and its group companies that have defaulted on payments.
A bench headed by Chairman Justice S J Mukhopadhaya lifted the embargo on the banks to declare the accounts of the debt-ridden IL&FS and its 300 group entities.
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However, the appellate tribunal has also clarified that although the banks would declare the IL&FS accounts as NPAs but cannot initiate recovery process and debit money.
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The bench has observed that lenders must not withdraw support until a resolution is found of the IL&FS and its group companies.
Presently, Infrastructure Leasing & Financial Services (IL&FS) Group companies, with a collective debt of over Rs 90,000 crore, are going through resolution process.
The NCLAT had in February prohibited banks from recognising any IL&FS group accounts as non-performing assets without first seeking approval from the tribunal.
The RBI had moved the NCLAT, filing a plea to modify the order allowing the banks to declare the defaulting accounts of IL&FS as NPAs as per the banking regulations.
Now, all group companies of IL&FS are being classified according to their ability to meet payment obligations.
Those able to meet all payment obligations are categorised as ‘green’ while companies able to meet only operational payments and senior secured debt obligations are categorised as ‘amber’. Others are categorised as ‘red’.
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