A special court on Wednesday issued summons to financial company IL&FS and 22 others including its directors and independent directors among others in connection with a complaint filed by the Serious Fraud Investigation Office (SFIO) in 2018, stating that a prima facie case is made against them on charges including cheating and criminal conspiracy. The court also discharged six others from the case. The SFIO had sought action against the accused for various violations under the Companies Act and certain sections of the Indian Penal Code. Investigation had been ordered by the Ministry of Corporate Affairs into IL&FS (Infrastructure Leasing and Financial Services) and its subsidiary companies in 2018. The SFIO had claimed that IL&FS through its subsidiary company extended loans to various companies including those who were not servicing their debt obligations timely. The agency claimed that the top management of the subsidiary company were aware of these potentially problematic accounts and the adverse impact they would have. They, therefore, are alleged to have adopted fraudulent practice so that loans and credits given do not turn into Non-Performing Assets as required under rules of Reserve Bank of India. The accused then began lending to other companies belonging to the same defaulters so they could pay the earlier loans. The SFIO has claimed that there are 88 such instances to the tune of Rs 9,280.42 crore during the fiscal 2013-2014 until 2017-2018. The SFIO also named independent directors and CFO of the company as accused stating that they had failed their duties, ignoring alarming indicators, and remained "mute spectators" to the acts of the directors of the company. Special Judge AA Joglekar considered submissions of the SFIO and the material placed before him, and observed that a prima facie case is made out against the 23. Among those against whom the court issued process include IL&FS, its eight directors including Hari Sankaran and Ramesh Bawa, statutory auditors, one valuer and a proprietor.
