Infrastructure Leasing & Financial Services (IL&FS) has filed a petition with the National Company Law Tribunal (NCLT) demanding the recovery of ₹185.88 crore paid as 'excess managerial remuneration' to its former directors and directors of two subsidiary companies of the group.
This demand arose after a review of financial statements spanning five fiscal years, covering the period from 2013-14 to 2017-18. In the application submitted to the Mumbai Bench of NCLT, the company sought an order compelling the former directors and two key subsidiaries—IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL)—to return this surplus compensation.
The company requested an interim order obligating the identified former directors to 'deposit the excess managerial remuneration/illicit income into a separate interest-bearing deposit account' during the pendency of the case before the NCLT.
IL&FS, which was affected by fraud, stated that it had paid remuneration to its former executives based on the profits reflected in the initial accounting records. However, after these reports were revised at the direction of the NCLT, they showed losses.
The revised accounts indicated that IL&FS accumulated a total loss of ₹9,415.24 crore for the period FY14 to FY18, against declared profits of ₹1,865.73 crore. IFIN's loss amounted to ₹5,655.22 crore against a profit of ₹1,015.67 crore, while ITNL's loss reached ₹1,628.44 crore against a profit of ₹1,246.33 crore.
The Ministry of Corporate Affairs had previously directed IL&FS to recover the excess remuneration paid, after which notices were sent to all 23 former directors. Nevertheless, IL&FS noted that despite numerous reminders, the funds have not been returned by the former executives.
Currently, only three former non-executive directors—two from IL&FS and one from ITNL—have returned the funds. Of the total amount due for return, which is ₹187.02 crore, only ₹91.09 lakh rupees have been returned so far (after deducting ₹22.78 lakh rupees paid as income tax), constituting 'less than 0.5 percent' of this amount, according to the filing.
The petition filed with the NCLT this week named all 23 former directors as respondents. The list includes well-known independent directors of IL&FS such as R C Bhargava, Jaithirth Rao, Michael Pinto, S B Mathur, and Rina Kamath; directors of IFIN—Subhalakshmi Panse, Surinder Singh Kohli, and Neera Saggi; and directors of ITNL—Deepak Dasgupta and Pradeep Puri. Former executive directors, including Hari Sankaran, Arun Kumar Saha, Ramesh Bawa, and K Ramchand, were also named. In the case of the late IL&FS Chairman Ravi Partasarathi, the recovery claim has been initiated against his legal heir.
IL&FS stated that the recovery from managing directors, full-time directors, managers, and CEOs is carried out in accordance with Section 199 of the Companies Act, whereas Section 197(9) obligates 'any director,' including independent and non-executive ones, to return amounts received above prescribed limits.
The former directors are contesting the notices, citing that the revised financial statements cannot retroactively nullify payments approved under duly audited original reports, that the revised reports are not audited extracts, and that the notices are vague due to discrepancies between the initial and subsequent notifications.
IL&FS characterized these responses as 'baseless, unfounded, and having no resemblance to merit,' noting that the discrepancy was a calculation variation that has since been corrected.
As of October 2018, the IL&FS Group had raised asset-backed debt financing of ₹94,215 crore out of a total external debt of ₹99,355 crore. Of this amount, ₹48,000 crore, nearly 51 percent, was raised by four key holding companies: IL&FS Group, IFIN, ITNL, and IEDCL. The IL&FS Group settles its debts through monetization and cessation/settlement of payments by its entities to concession authorities and counterparties under the respective agreements. The company maintained a total debt resolution target of ₹61,000 crore. The new board of directors of IL&FS has already taken steps to settle approximately ₹50,387 crore of the group debt as of June 30, 2026.
On October 1, 2018, the NCLT replaced the existing IL&FS board of directors upon central recommendation following a major crisis at IL&FS that shook the financial industry. A new board of directors was appointed to manage the company's affairs, and the NCLAT developed a framework for resolving the crisis group. It also provided protection to IL&FS companies from any further claims and immunity to the newly appointed IL&FS directors from any litigation regarding past actions of suspended directors or any of their officers.