The National Company Law Tribunal on Monday allowed the Centre’s plea to take immediate control of debt-hit Infrastructure Leasing and Financial Services, PTI reported.

IL&FS and its subsidiaries have a combined debt of more than Rs 91,000 crore and have defaulted on multiple loan repayments in the last couple of months. The situation is reportedly so grim that it is being compared to the 2008 Lehman Brothers crisis that triggered a global financial meltdown.

A bench of judges MK Shrawat and Ravikumar Duraisamy said the mismanagement at the company made it fit for invoking Article 241 (2) of the Companies Act 2013, which provides for the suppression of the existing board. The bench said it was apparent that the affairs at the company were being conducted “in a manner prejudicial to public interest”, according to PTI.

In its application, the government requested to remove the board of the company and replace all board members. The Centre’s proposal to let a six-member team take over the IL&FS board was approved. The committee will comprise Uday Kotak of the Kotak Mahindra Bank, former SEBI chairperson GN Bajpai, ICICI’s non-executive chairperson GC Chaturvedi, retired IAS officer Vineet Nayyar, IAS officer Malini Shankar and senior official at the Comptroller and Auditor General’s office Nand Kishore.

“The government stands fully committed to ensure that needed liquidity is arranged for the IL&FS from the financial system so that no more defaults take place and the infrastructure projects are implemented smoothly,” the Ministry of Finance said in a statement. “The government would also take all necessary steps to ensure that the infrastructure and other productive sectors of the economy continue to get financial resources to maintain the growth momentum of the Indian Economy, the fastest growing economies in the world.”

The board members will be allowed to unanimously elect a chairperson among themselves. It will hold its first meeting on October 8 and submit a report on its findings by October 31, when the case will be heard again.

The tribunal ordered that the suspended directors of IL&FS shall not represent the company anywhere, Bloomberg reported.

This is the second time the Indian government has taken over a private company. In 2009, the government took over control of Satyam Computer Services and subsidiaries following the country’s biggest accounting scandal.

‘Congress is a national saboteur,’ says Arun Jaitley

Meanwhile, Union Finance Minister Arun Jaitley accused the Congress of spreading disinformation about the government’s possible moves in connection with the IL&FS matter. “The Congress is a national saboteur,” Jaitley said in Facebook post. “It wants to sabotage India’s economy by allowing a situation in relation to a company to persist, expand and become unmanageable. It lacks statesmanship and vision.”

The Union minister said several entities, including the Life Insurance Corporation, have invested heavily in IL&FS over the years. “Was it a scam in 1987 when the IL&FS was promoted with the Central Bank of India having 50.5% shares and the UTI having 30.5% shares?” he asked. “Was it a scam in 2005 when LIC acquired 15% stake in IL&FS and in March, 2006 when it acquired another 11.10% stake in the IL&FS? In fact, LIC further bought 19.34 lakh shares in IL&FS in 2010. Do I start calling all these investments today ‘a scam’ as per ‘the perverted Rahul Gandhi school of thinking?’”

He said a section of the Congress leadership has urged him to enable investments in IL&FS to save the company. Congress leader and former Union minister KV Thomas had written to him on ways to bail out the debt-laden company, the minister added.

“I am enclosing his letter. It demolishes every word that Rahul Gandhi and his coterie has been spreading,” Jaitley said. “It may be advisable for Rahul Gandhi to get some ‘words of wisdom’ from Prof KV Thomas. The Congress Party must remember that ‘the days of crony capitalism are over.’ The NDA government deals with such challenges objectively and professionally.”