IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

 IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

IL&FS KNOCKS NCLT TO RECOVER RS 185 CRORE EXCESS #REMUNERATION PAID TO 23 ERSTWHILE (IL&FS, IFIN, AND ITNL) DIRECTORS , MANAGERS & INDEPENDENT DIRECTORS.

LOSSES DUE TO RECASTED ACCOUNTS

This has been exposed after the recasted accounts of these companies (FY13-18) unveiled significant losses in its financials as compared to profits recorded earlier.

MANAGERIAL REMUNERATION RECOVERY UNDER SECTION 199 OF THE COMPANIES ACT

IL&FS said #recovery from managing directors, whole-time directors, managers and CEOs is being pursued under Section 199 of the Companies Act,

RECASTING OF ACCOUNTS

Section 199 of CA authorizes the recovery of excess remuneration paid to managerial personnel when a company is forced to restate its financial statements.

RECOVERY FROM INDEPENDENT DIRECTORS

Section 197(9) obligates "any director", including non-executive and independent directors, to refund sums drawn beyond prescribed limits.

APPLICATION TO NCLT MUMBAI

In an application filed before the Mumbai Bench of the NCLT, IL&FS has sought directions to its former directors and two key subsidiaries, IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL), to return the excess remuneration.

RECASTED ACCOUNTS SHOWS A CUMULATIVE LOSS OF Rs 9,415.24 crore.

The recast accounts showed that IL&FS actually had a cumulative loss of Rs 9,415.24 crore from FY14 to FY18 against a reported profit of Rs 1,865.73 crores.

MCA DIRECTION

The Ministry of Corporate Affairs had directed IL&FS to recover the excess remuneration paid, following which IL&FS had issued notices to all 23 erstwhile directors.

RETALIATION BY IL&FS FORMER DIRECTORS

The former directors have disputed the notices on grounds including that the recast financials cannot retrospectively invalidate pay approved under duly audited original accounts, that the recast accounts are not audited statements and that the notices are vague because amounts differed between the first and later notices.

MAIN QUESTION

SHOULD IL&FS DIRECTORS, MANAGERS & INDEPENDENT DIRECTORS BE REQUIRED TO REFUND RS 185 CRORE EXCESS REMUNERATION WHEN PROFITS ON WHICH THEIR REMUNERATION WAS CALCULATED ARE SUBSEQUENTLY REVERSED THROUGH LEGALLY APPROVED RESTATEMENT OF FINANCIAL STATEMENTS?

CONCLUSION

The IL&FS case could become an important test of Sections 197 and 199 of the Companies Act, 2013, particularly concerning the recovery of excess remuneration from former independent directors. It sends a strong message that boardroom accountability must be substantive, not merely procedural.

#R V SEKAR FCS, LLB 79047 19295,

MISUSE OF IBC FRAMEWORK

MISUSE OF IBC FRAMEWORK

Key Finding

: The Insolvency and Bankruptcy Board of India (IBBI) has expressed concern that the Insolvency and Bankruptcy Code, 2016 (IBC) is being misused in certain cases for purposes other than genuine insolvency resolution or liquidation of corporate debtors.

- Important Facts: 

IBBI has identified several potential misuse patterns, including mitigating tax liabilities, closing or merging companies without regulatory scrutiny, avoiding investigations, prosecution and penalties under various statutes, and monetising or ring-fencing corporate assets.

- Analysis: 

The IBC is intended to facilitate time-bound insolvency resolution or liquidation, not to provide an alternative mechanism for avoiding statutory liabilities, regulatory oversight or legal proceedings. Using insolvency proceedings for such collateral purposes could undermine the objectives and integrity of the insolvency framework.

- Impact: 

Resolution Professionals (RPs), creditors, directors and other stakeholders must exercise heightened vigilance to identify transactions or insolvency applications that may conceal improper motives, facilitate asset transfers or circumvent statutory obligations.

- Conclusion / Action 

Required: IBBI emphasises that vigilance by Resolution Professionals is paramount. RPs should independently examine the commercial purpose of transactions, scrutinise asset monetisation and transfers, identify potential regulatory circumvention, and ensure that insolvency proceedings are conducted strictly in accordance with the IBC, 2016.

SUNDARAM-CLAYTON: COMPANY SECRETARY’S RESIGNATION AND REAPPOINTMENT REVERSED WITHIN 72 HOURS – CORPORATE GOVERNANCE CONCERNS

 SUNDARAM-CLAYTON: COMPANY SECRETARY’S RESIGNATION AND REAPPOINTMENT REVERSED WITHIN 72 HOURS – CORPORATE GOVERNANCE CONCERNS

POWER STRUGGLE IN SUNDARAM CLAYTON BOARD

KEY FINDING:

On 27 March 2026, Sundaram Clayton’s Board accepted the Company Secretary’s resignation and approved a replacement appointment, with three of the four Independent Directors present supporting the decisions; however, both decisions were reversed at an emergency Board meeting on 30 March 2026.

- IMPORTANT FACTS:

The company disclosed the Friday decisions to BSE and NSE on the same day. On 30 March, the Company Secretary withdrew his resignation, the replacement appointment was cancelled,

R Gopalan attended and voted for reinstatement, stepped down as Chairman, and continued as a Non-Executive Independent Director; Venu Srinivasan was redesignated Chairman.

- ANALYSIS:

The reversal within 72 hours raises questions about the stability of Board decisions, the independence of Board oversight and the circumstances surrounding the emergency meeting convened by Venu Srinivasan, then Chairman Emeritus. One of the Independent Directors who approved the original decisions also changed position.

- IMPACT:

Such rapid reversals can create uncertainty for investors, employees and stakeholders regarding leadership continuity and corporate governance. They also highlight the importance of transparent Board deliberations, proper documentation of decisions and clear disclosures to stock exchanges.

HERE IS AN ACTUAL FAMILY SUCCESSION DISPUTE

Recent reporting confirms a serious disagreement within the immediate Venu Srinivasan family.

The family has effectively split into two groups:

WHAT IS THE ACTUAL DISPUTE ABOUT?

The central issue is division of family wealth and economic ownership between the son and daughter.

- Venu Srinivasan's position is that succession arrangements have already been made.

- Sudarshan is associated with TVS Motor Company and TVS Holdings.

- Lakshmi is associated with Sundaram-Clayton and TAFE.

- Mallika and Lakshmi contend that allocation of management responsibilities does not amount to a final settlement of family wealth.

- They want a transparent and fair determination of the economic ownership interests.

THE MARCH 2024 FAMILY MOU IS A MAJOR POINT OF DISAGREEMENT

A memorandum of understanding was signed on 20 March 2024 by the four family members.

The disagreement concerns its scope:

LATEST DEVELOPMENT – OCTOBER 2026: THE DISPUTE REACHES THE COURTS

Major development

The dispute has moved beyond internal family discussions.

According to reports dated 27–31 October 2026:

- Venu Srinivasan and Sudarshan Venu have filed caveats.

- Mallika Srinivasan and Lakshmi Venu have also filed caveats.

- The filings were made in Chennai civil and commercial courts on 12 and 13 October.

- Venu and Sudarshan are seeking to protect their legal interests against possible proceedings.

- Mallika and Lakshmi have reiterated their preference for an amicable settlement through transparent discussions.

- The dispute concerns inheritance, economic ownership and division of family business interests.

A caveat is a precautionary legal filing intended to ensure that a court hears the caveator before passing an order affecting their interests. It is not itself a court judgment or proof that a lawsuit has been decided.

- CONCLUSION / ACTION REQUIRED:

Companies should ensure that key managerial personnel appointments and resignations are supported by documented Board deliberations and sound governance processes. The circumstances and rationale for reversing the original decisions should be clearly documented and appropriately disclosed to stock exchanges to maintain investor confidence.

#R V SEKAR FCS, LLB 79047 19295,

#FILING OF SCHEDULE OF ANALYSTS / INSTITUTIONAL INVESTORS MEET IN XBRL FORMAT WITH STOCK EXCHANGES BY LISTED COMPANIES IN INDIA,

 #FILING OF SCHEDULE OF ANALYSTS / INSTITUTIONAL INVESTORS MEET IN XBRL FORMAT WITH STOCK EXCHANGES BY LISTED COMPANIES IN INDIA, 

Listed companies are required to disclose the schedule of meetings with analysts and institutional investors to the stock exchanges in accordance with the SEBI LODR.

The disclosure is intended to ensure transparency, prevent selective disclosure of unpublished price-sensitive information (UPSI), and provide equal access to information to all investors.

Disclosure should be made at least 2 working days in advance and this will exclude date of intimation and date of meeting.

It is applicable to   group meetings or group conference calls, whether physical or digital.

#R V SEKAR FCS, LLB 79047 19295,

NCLT JAIPUR: INVALID BOARD MEETING NOTICE LEADS TO CANCELLATION OF ALLOTMENT OF 90,000 SHARES AND RESTORATION OF ORIGINAL SHAREHOLDING

 NCLT JAIPUR: INVALID BOARD MEETING NOTICE LEADS TO CANCELLATION OF ALLOTMENT OF 90,000 SHARES AND RESTORATION OF ORIGINAL SHAREHOLDING

KEY FINDING:

In Jagbir Singh & Anr. Vs. AdwAin Infratech Pvt. Ltd. & Ors., the NCLT Jaipur Bench cancelled the allotment of 90,000 equity shares due to failure to establish that proper notice of the purported Board Meeting dated 30 August 2021 had been issued.

IMPORTANT FACTS:

The Tribunal ordered cancellation of the disputed 90,000 shares, restoration of the original shareholding pattern and cancellation of the appointments of three additional directors.

 ANALYSIS:

The decision highlights the importance of complying with statutory and procedural requirements for convening Board Meetings, particularly proper notice to directors. A disputed Board Meeting that cannot be established through supporting evidence can undermine consequential corporate decisions.

IMPACT:

Companies and directors face risks of invalidation of share allotments, changes in directorship and consequential corporate records where proper Board Meeting procedures are not followed or documented.

CONCLUSION / ACTION REQUIRED:

The company must complete consequential statutory filings and restore its statutory records in accordance with the Tribunal's directions.

Companies should maintain proper Board Meeting notices, proof of dispatch, attendance records and minutes to protect the validity of Board decisions.

#R V SEKAR FCS, LLB 79047 19295,

FOR DELAY IN FILING THE FORM MR-2-INTIMATION OF MD APPOINTMENT WITH 179 DAYS DELAY , ROC IMPOSED A TOTAL PENALTY OF RS ₹3,38,000 ON COMPANY AND ITS DIRECTORS.

FOR DELAY IN FILING THE FORM MR-2-INTIMATION OF MD APPOINTMENT WITH 179 DAYS DELAY , ROC IMPOSED A TOTAL PENALTY OF RS ₹3,38,000 ON COMPANY AND ITS DIRECTORS.

ROC , BENGALURU Vs ASTRAZENECA PHARMA INDIA LIMITED

Directors have to pay the fine from their personal funds and not from the company funds

TECHNICAL GLITCH

This case demonstrates that even where a company claims a technical issue on the MCA portal, the Registrar may still impose penalties for delayed statutory filings.

DIRECTORS HAVE TO THE PAY THE FINE PERSONALLY

The fine levied on three directors Rs 50,000 each is to be paid from their personal funds and not from the company funds.

COMPLIANCE TAKEAWAY

·       For companies and compliance officers, the order reinforces three important principles:

·       Technical glitches are not always accepted as a complete defense. ROC may consider explanations but can still levy penalties if the statutory timeline is missed.

·       MD/WTD/Manager-related filings attract personal exposure. The company is penalized, but directors/KMPs identified as officers in default may also face individual penalties.

·       Evidence preservation is critical. When MCA portal issues occur, companies should maintain screenshots, SRNs, helpdesk tickets, emails, and follow-up records to support mitigation requests before the ROC.

KEY TAKEAWAY

From a corporate governance perspective, this order is another reminder that procedural non-compliance can attract adjudication penalties even when there is no allegation of fraud, investor loss, or governance misconduct. The ROC is increasingly enforcing filing-related provisions through adjudication under Section 454 of the Companies Act, 2013.

#R V SEKAR FCS, LLB 79047 19295,

DEADLINE REMINDER FORM NFRA-2 TO BE FILED BY AUDITOR AND AUDIT FIRMS ON OR BEFORE 30th NOVEMBER EVERY YEAR

 DEADLINE REMINDER FORM NFRA-2 TO BE FILED BY AUDITOR AND AUDIT FIRMS ON OR BEFORE 30^th NOVEMBER EVERY YEAR

MAJORITY OF AUDIT FIRMS DOES NOT

 AWARE THAT THERE IS FORM NFRA-2 TO

 BE FILED!

FORM NFRA-2

Form NFRA-2 is an annual return to be filed by auditors and audit firms covered under Rule 3 of the National Financial Reporting Authority (NFRA) Rules, 2018. The statutory due date is 30 November every year, under Rule 5.

APPLICABILITY

Auditors of Listed companies. Large unlisted public companies. Banks, insurers and electricity companies have to file this form compulsorily.

The return due this 30 November covers audit reports Auditor’s signed between 1 April 2025 and 31 March 2026.

NON-FILING

For 2024-25, NFRA's May list named 1,314 firms that had not filed.

KEY TAKEAWAY

Awareness of NFRA-2 applicability remains a challenge, particularly among small and mid-sized audit firms. In many cases, non-compliance may stem from a lack of clarity on applicability rather than a deliberate omission.

Greater awareness and clearer guidance, particularly for statutory bank branch auditors, would certainly help strengthen compliance across the profession.

#R V SEKAR FCS, LLB 79047 19295,