IL&FS’s application before the National Company Law Tribunal to recover ₹185.88 crore in excess managerial remuneration is more than a dispute over pay. It brings into focus how infrastructure companies can report profits, approve remuneration and expand debt while the underlying financial position moves in the opposite direction. The case also shows the difficulty of reversing those decisions after a corporate crisis has already spread through lenders, subsidiaries and public infrastructure contracts.
The application, filed before the Mumbai Bench of the NCLT, seeks recovery from 23 former directors of Infrastructure Leasing & Financial Services and two group companies, IL&FS Financial Services and IL&FS Transportation Networks. IL&FS has also asked the tribunal to direct the former directors to deposit the alleged excess remuneration or undue gains in a separate interest-bearing fixed deposit account while the proceedings continue.
According to the company, the remuneration was paid on the basis of profits shown in the original financial statements for the five financial years from 2013-14 to 2017-18. Those accounts were later recast following directions from the NCLT. The recast figures showed that IL&FS had incurred a cumulative loss of ₹9,415.24 crore during the period, compared with a reported profit of ₹1,865.73 crore. The reversal was also visible at the two subsidiaries named in the application. IFIN’s reported profit of ₹1,015.67 crore became a loss of ₹5,655.22 crore, while ITNL’s reported profit of ₹1,246.33 crore became a loss of ₹1,628.44 crore.
That contrast is the central governance issue in the case. Executive remuneration is ordinarily linked to financial performance, board approval and the accounts available at the time. But when those accounts are subsequently recast, the basis for the payments becomes contested. IL&FS says the revised financial position requires the excess amounts to be returned. The former directors, according to the application, have argued that the recast financial statements cannot retrospectively invalidate remuneration approved on the basis of duly audited original accounts. They have also questioned whether the recast accounts qualify as audited statements and objected to differences between amounts mentioned in successive notices.
The dispute therefore extends beyond whether money was paid. It concerns which set of financial statements should govern accountability, how responsibility is distributed between executive and non-executive directors, and whether later findings about a company’s financial condition can result in recovery from individuals who approved or received remuneration earlier.
IL&FS has invoked Sections 199 and 197(9) of the Companies Act in pursuing the claims. The company said recovery from managing directors, whole-time directors, managers and chief executive officers is being pursued under Section 199, while Section 197(9) requires any director, including non-executive and independent directors, to refund sums drawn beyond prescribed limits. The application names former executive directors as well as prominent independent directors, making the case significant for the way board-level accountability is applied across different roles.
The recovery effort has so far produced limited results. IL&FS said the total refundable amount was ₹187.02 crore, of which only ₹91.09 lakh had been returned after accounting for ₹22.78 lakh paid as income tax. That represents less than 0.5 per cent of the total, according to the application. Three former non-executive directors—two from IL&FS and one from ITNL—have refunded money. The company said the remaining former managerial personnel did not make refunds despite notices and reminders.
The recovery proceedings also include a legal-heir dimension. The claim against former IL&FS chairman Ravi Parthasarathy, who has died, has been initiated against his legal heir. That step illustrates how the consequences of corporate failures can continue after the original decision-makers are no longer available to participate directly in the proceedings.
The remuneration case cannot be separated from the scale of the IL&FS crisis. As of October 2018, the group had fund-based debt of ₹94,215 crore out of total external debt outstanding of ₹99,355 crore. About ₹48,000 crore, or nearly 51 per cent of the fund-based debt cited in the application, was associated with four key holding companies: IL&FS Group, IFIN, ITNL and IL&FS Energy Development Company.
Those figures reveal why the group’s problems became an infrastructure and financial-system issue rather than a conventional company dispute. IL&FS and its subsidiaries were connected to infrastructure projects and financing arrangements. When a group of this scale faces distress, the question is not limited to shareholder returns. It includes the ability of project companies to meet obligations, the exposure of lenders and counterparties, and the continuity of contracts and concessions linked to transport and other infrastructure assets.
The government response in 2018 was correspondingly institutional. On October 1 that year, the existing IL&FS board was superseded on the Centre’s recommendation after the crisis shook the finance industry. A new board was appointed to manage the group, while the National Company Law Appellate Tribunal conceived a framework for resolving the crisis. The tribunal framework also provided protection to IL&FS companies from recovery of further dues and immunity to newly appointed directors from proceedings relating to past actions of suspended directors or officers.
The new board has since pursued debt resolution through monetisation and the termination or settlement of payments by group entities with concessioning authorities and contractual counterparties. IL&FS has maintained an overall debt-resolution target of ₹61,000 crore and said the new board had executed steps to resolve about ₹50,387 crore of group debt as of June 30, 2026. These numbers indicate that the recovery of remuneration is one part of a wider process involving asset monetisation, contractual settlements and the restructuring of a highly indebted infrastructure group.
That distinction matters. Debt resolution addresses the claims of lenders and other creditors; remuneration recovery addresses the alleged transfer of value to individuals when the company’s reported performance was later overturned. The two processes may arise from the same corporate failure but involve different evidence, legal standards and recovery routes. The NCLT application is therefore an attempt to establish personal financial accountability alongside the broader institutional restructuring.
The case also raises a question about the practical strength of independent oversight. The list of respondents includes independent directors from IL&FS, IFIN and ITNL, along with former executive directors. IL&FS’s position is that the statutory obligation to refund excess remuneration can apply to any director where the relevant conditions are met. The former directors’ objections, as recorded in the application, challenge the retrospective use of recast accounts and the clarity of the notices. The tribunal will have to consider those competing positions rather than treating board designation alone as conclusive.
For infrastructure companies, the episode underlines the importance of financial reporting as a public-interest function. Large project groups often operate through several subsidiaries, concession agreements and financing vehicles. A profit figure at the holding-company or subsidiary level can influence remuneration, borrowing and investor confidence. If that figure is later replaced by a substantial loss, the effects extend beyond accounting records to compensation, creditor recovery and the credibility of board supervision.
The supplied figures also show the difference between the scale of the original crisis and the pace of individual recovery. IL&FS’s reported debt-resolution progress is measured in tens of thousands of crores, while the amount refunded by former directors remains below one crore. The comparison does not determine the merits of the claims, but it demonstrates why the remuneration application has symbolic and institutional importance within the larger resolution process.
The NCLT proceedings will now determine how the recovery claims are treated, including the objections raised by the former directors and the request for an interim deposit. What the case confirms at this stage is that IL&FS is pursuing recovery based on the difference between original and recast accounts, that only a small portion of the claimed amount has been refunded, and that the company’s wider debt-resolution exercise remains ongoing. The tribunal’s handling of the claims will establish the next stage in the accountability process.