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NCLAT Exempts About 50 IL&FS Red and Amber Firms From CSR Spending

The tribunal held that paper profits from halted interest accrual during the moratorium do not trigger mandatory CSR outlays under Section 135(5).

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Overview

  • A two-member NCLAT bench led by Chairperson Justice Ashok Bhushan granted the waiver using discretionary powers under Sections 241(2) and 242(2)(m) of the Companies Act.
  • The relief covers roughly 50 financially stressed IL&FS entities classified as red or amber that have been under an NCLAT moratorium since October 15, 2018.
  • IL&FS sought the exemption after red and amber companies showed notional profits under Section 198 because interest on outstanding debt was not being accrued.
  • Section 135(5) ordinarily requires eligible companies to spend at least 2% of average net profits from the previous three years on CSR activities.
  • IL&FS reports having discharged Rs 48,463 crore to creditors as of September 2025 and fully resolved 202 entities, with asset sales and interim distributions continuing.