There shall be stay of the institution or continuation of suits or any other proceedings by any party or person or bank or company against IL&FS and its 348 group companies

NCLAT statement

“There shall be stay of the institution or continuation of suits or any other proceedings by any party or person or bank or company, etc against IL&FS and its 348 group companies in any court of law/tribunal/arbitration panel or arbitration authority,” the appellate tribunal said.

It added that there would also be stay on “any action by any party or person or bank or company etc to foreclose, recover or enforce any security interest created over the assets of IL&FS and its 348 group companies including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002”.

The next hearing on the matter is on November 13.

The government, in its application filed before the NCLT, had sought three months' moratorium over “institution or continuation” or any other proceedings against IL&FS and any of its group companies in “any court of law/tribunal/arbitration panel or arbitration authority”.

The National Company Law Appellate Tribunal (NCLAT) on Monday granted a moratorium on all creditor actions against IL&FS and its 348 group firms till further orders, following an urgent petition moved by the Centre.

The ministry of corporate affairs (MCA) had approached the appellate tribunal after the Mumbai bench of the National Company Law Tribunal (NCLT) turned down its plea to grant 90 days moratorium against legal action over the loans taken by IL&FS and its subsidiaries.

Passing an interim order over the government’s plea, a two-member NCLAT bench headed by Justice S.J. Mukhopadhaya stayed all the proceedings “taking into consideration the nature of the case, larger public interest and economy of the nation and interest of IL&FS and 348 group companies”.

The moratorium prohibits initiation or continuation of legal proceedings, enforcement of security over assets of IL&FS and its group companies in addition to restricting creditors from making demands for payment of their credit facilities, debt securities, premature withdrawal of deposits or appropriating cash balance of IL&FS or its group companies.

It, however, will not extend to specific high court proceedings under Article 226 of the Constitution of India or matters which fall within the jurisdiction of the Supreme Court of India.