IL&FS’s application before the National Company Law Tribunal to recover Rs 185.88 crore in alleged excess managerial remuneration is more than a dispute over executive pay. It is a test of what happens when the financial accounts of a systemically important infrastructure-finance group are rewritten after a crisis, and when compensation approved on reported profits is challenged after those profits turn into losses.
The Mumbai Bench of the NCLT is being asked to direct former directors of Infrastructure Leasing & Financial Services and two key subsidiaries, IL&FS Financial Services and IL&FS Transportation Networks, to return the money. The company has also sought an interim direction requiring the identified former directors to deposit the amount in a separate interest-bearing fixed deposit account while the proceedings continue.
The application names 23 former directors. IL&FS said the Ministry of Corporate Affairs directed it to pursue recovery after the group’s financial statements for five years, from 2013-14 to 2017-18, were recast under directions issued after the 2018 crisis. The company said remuneration had originally been paid on the basis of profits shown in the accounts then available, but the recast statements presented a substantially different financial position.
That distinction is central to the case. According to the figures cited in the application, IL&FS had originally reported a cumulative profit of Rs 1,865.73 crore for the five-year period. The recast accounts showed a cumulative loss of Rs 9,415.24 crore. At IFIN, a reported profit of Rs 1,015.67 crore became a loss of Rs 5,655.22 crore. At ITNL, a reported profit of Rs 1,246.33 crore became a loss of Rs 1,628.44 crore.
These numbers show why the remuneration dispute cannot be separated from the wider governance failure. Infrastructure-finance companies sit between capital providers and long-duration projects whose revenues depend on construction, concessions, counterparties and public authorities. When financial reporting presents a healthier position than the underlying business can sustain, compensation is only one visible consequence. Lending decisions, risk assessments, project commitments and the ability of group companies to refinance can also be affected. The supplied material does not establish a causal link between each of these outcomes, but it documents the scale of the accounting reversal that triggered the recovery effort.
IL&FS said the total refundable amount was Rs 187.02 crore, of which only Rs 91.09 lakh had been recovered after accounting for Rs 22.78 lakh paid as income tax. That was less than 0.5 per cent of the amount, the application said. Three former non-executive directors—two from IL&FS and one from ITNL—had refunded money. The company said none of the other former managerial personnel had made a refund despite notices and reminders.
The recovery proceedings include prominent independent directors such as R C Bhargava, Jaithirth Rao, Michael Pinto, S B Mathur and Rina Kamath at IL&FS; Subhalakshmi Panse, Surinder Singh Kohli and Neera Saggi at IFIN; and Deepak Dasgupta and Pradeep Puri at ITNL. Former executive directors named include Hari Sankaran, Arun Kumar Saha, Ramesh Bawa and K Ramchand. In the case of former IL&FS chairman Ravi Parthasarathy, who has died, the recovery claim has been initiated against his legal heir.
IL&FS says it is pursuing recovery from managing directors, whole-time directors, managers and chief executive officers under Section 199 of the Companies Act. It also relies on Section 197(9), which requires any director, including a non-executive or independent director, to refund amounts drawn beyond prescribed limits. The legal provisions therefore bring different categories of board and management personnel into the same recovery framework, although the final liability of individual respondents remains a matter for the tribunal.
The former directors have disputed the notices, according to IL&FS. Their objections include the argument that recast financial statements cannot retrospectively invalidate remuneration approved on the basis of duly audited original accounts. They have also argued that the recast accounts are not audited statements and that the notices were vague because the amounts changed between the first and later notices. IL&FS described these objections as baseless and said the differences resulted from a calculation variation that had been corrected.
The NCLT application thus places two accountability principles in tension. One is that directors and senior executives should not retain remuneration linked to profits that disappear after the accounts are corrected. The other is that liability should not be imposed retrospectively without clarity on the validity of the revised accounts, the basis of calculation and the role played by each respondent. The supplied material records both positions but does not establish how the tribunal will resolve them.
The case also sits within a much larger institutional response to the IL&FS collapse. On October 1, 2018, the NCLT superseded the group’s existing board on the Centre’s recommendation after the crisis shook the finance industry. A new board was appointed, and the National Company Law Appellate Tribunal conceived a framework for resolving the group’s liabilities. Protection was also granted to IL&FS companies against recovery of further dues, along with immunity for newly appointed directors from proceedings relating to past actions of suspended directors or officers.
The crisis exposed the importance of board oversight in infrastructure-linked financial entities. IL&FS was not a conventional developer or contractor. Its group companies were connected to transport networks, financial services and other infrastructure activities, while the group relied heavily on external borrowing. As of October 2018, the group had fund-based debt of Rs 94,215 crore out of total external debt outstanding of Rs 99,355 crore. The application said that Rs 48,000 crore, or almost 51 per cent, was availed by four key holding companies: IL&FS Group, IFIN, ITNL and IEDCL.
Those figures explain why the resolution process has remained an urban and infrastructure concern rather than only a corporate insolvency story. Infrastructure projects frequently involve long construction periods, concession agreements, public authorities and layered financing structures. A failure at a major financing platform can therefore affect the completion, ownership or monetisation of assets even when the underlying roads, transport systems or other projects continue to exist.
IL&FS has said it is resolving debt through monetisation and the termination or settlement of payments by group entities from concessioning authorities and counterparties to relevant contracts. It has maintained an overall debt-resolution target of Rs 61,000 crore. According to the report, the new board had executed steps to resolve about Rs 50,387 crore of group debt as of June 30, 2026.
The gap between the reported resolution figure and the overall target indicates that the process has moved substantially but is not complete. It also shows why the recovery of remuneration is being pursued alongside asset monetisation and settlement activity. The corporate resolution framework has to address both the balance sheet inherited from the failed structure and the accountability questions raised by the decisions taken before the board was superseded.
For urban infrastructure, the institutional lesson is that project delivery depends on more than construction capacity or government approvals. It also depends on whether the financing entities behind projects maintain credible accounts, identify risks early and preserve sufficient liquidity to meet obligations. The IL&FS case places those functions within a single continuing resolution process: debt recovery, asset monetisation, director accountability and tribunal oversight.
The immediate question before the NCLT is whether the requested recovery and interim deposit directions should be granted, and how the objections raised by the former directors should be assessed. The wider question is how Indian corporate and infrastructure governance should treat remuneration when later financial reconstruction changes the recorded economic position of a group. The supplied material confirms the scale of the reversal, the small proportion recovered so far and the legal grounds invoked by IL&FS. It does not establish the tribunal’s final findings. The next significant developments will therefore be the NCLT’s consideration of the application and the outcome of the recovery proceedings.
