Case Note & Summary
The appeals were filed by Infrastructure Leasing & Financial Services Ltd. (IL&FS) against the order dated 13.04.2026 of the National Company Law Tribunal (NCLT), which dismissed CA No. 226/2025 and allowed CA No. 368/2025 and CA No. 99/2025. The background involved IL&FS, registered as a core investment company with the Reserve Bank of India (RBI), and its subsidiary IL&FS Financial Services Ltd. (IFIN), which was directed by RBI to reduce exposure to group companies. The Union of India filed a petition under Sections 241 & 242 of the Companies Act, 2013, alleging oppression and mismanagement. The NCLT ordered a reconstitution of IL&FS's board and later found that transactions involving loans to group companies were fraudulent. The appeals arose from the NCLT's interpretation that consent was necessary for collapsing transactions, which IL&FS contested. The court analyzed whether the NCLT correctly construed the earlier order regarding consent and the implications of RBI's directions. Ultimately, the Tribunal held that the NCLT had misinterpreted the requirement for consent, allowing the appeals to proceed for further examination of the transactions in question.
Headnote
A) Company Law - Oppression and Mismanagement - Consent Requirement for Collapsing Transactions - Companies Act, 2013, Sections 241, 242 - NCLT held that mutual agreement was a mandatory precondition for collapsing transactions, and without consent from SIFL, the application could not be allowed. The Tribunal found that the interpretation of the NCLT was incorrect as it misconstrued the earlier order regarding the necessity of consent for collapsing transactions (Paras 5.23-5.24).
Issue of Consideration
Whether consent is mandatory for collapsing transactions under Sections 241 & 242 of the Companies Act, 2013.
Final Decision
The Tribunal held that the NCLT had misconstrued the order dated 16.01.2025 regarding the necessity of consent for collapsing transactions, allowing the appeals to proceed for further examination.
Law Points
- Companies Act
- 2013
- Sections 241
- 242
- Corporate Insolvency Resolution Process
- RBI Act
- 1934
