The debt crisis at IL&FS came to light following a series of defaults by its group companies

The Supreme Court on Tuesday allowed reopening of Infrastructure Leasing & Financial Services (IL&FS) accounts for the last five years. The move by the top court comes as a setback for Hari Sankaran, the former IL&FS managing director, who had challenged an order by the National Company Law Appellate Tribunal (NCLAT) to reopen the past books of the embattled infrastructure lending company. The matter relates to IL&FS' default on its interest payments last year that highlighted a liquidity crisis in the country's non-banking finance company (NBFC) sector.

Mr Sankaran and IL&FS Financial Services chief Ramesh C Bawa were arrested by the Serious Fraud Investigation Office (SFIO) in April this year in connection with its probe into loan defaults of IL&FS and its group companies.

The Supreme Court had in an interim order in May stayed the NCLAT's order to reopen the past books of IL&FS and its group companies, but the new management of the company urged it to vacate the stay.

The government, which took control of IL&FS' board in October last year, is working on a resolution plan for the ailing company.

IL&FS has defaulted on payment of loans to Small Industries Development Bank of India (SIDBI) and along with its subsidiaries has a combined debt of over Rs 91,000 crore.

The debt crisis at the infrastructure lender came to light following a series of defaults by its group companies beginning September 2018.

Once hailed as a pioneer of public-private partnership, the crisis-ridden IL&FS group has come under the scanner of multiple regulators for alleged defaults related to financial disclosures and corporate governance.

The Enforcement Directorate last month carried out fresh searches in Mumbai in connection with its money laundering probe in the multi-crore IL&FS payment default crisis, news agency Press Trust of India quoted officials as saying.