The Telegraph
Since 1st March, 1999
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ICICI Bank slaps pay-up ultimatum on Spic Petro

Mumbai, Dec. 8 (PTI): ICICI Bank has taken the legal route to recover its Rs 250-crore due from A. C. Muthaiah-promoted Spic Ltd. It has also decided to move the debt recovery tribunal (DRT).

The notice served on December 6 was not issued under the Securitsation Ordinance and it would allow the bank to recover dues independently, sources said here today.

Under the Ordinance, the institution requires approval of minimum 75 per cent of the lenders to initiate legal proceedings against the defaulter.

The company owes another Rs 850 crore to other banks and institutions including IDBI, State Bank of India, Dena Bank, Indian Bank and Central Bank. The company has not paid its lenders for the past several years.

ICICI Bank, taking the benefit of the provisions under the Ordinance, has attached the assets of defaulting groups Ahmedabad-based Mardia group and Pune-based Patheja group and issued notice to Gujarat-based Jord Engineers.

Spic had originally entered into an MoU in 1989 with Madras Refineries Limited (MRL), a public sector undertaking, to set up a naphtha based aromatic complex for manufacture of para-xylene and PTA. The joint venture named Arochem Ltd faced difficulties from the beginning due to delays in obtaining necessary approvals by MRL.

Owing to the delays, Spic decided to go on its own and floated Spic Petrochemicals. With MRL contesting the move in courts, the project work, which started in 1994 came to a complete halt in 1997.

In order to bring the dispute to an early end, Spic and MRL worked towards an amicable settlement which culminated into a memorandum of settlement between Spic and MRL in August 1998.

Under the agreement, MRL agreed to withdraw from the project on receiving a compensation of Rs 40 crore from Spic. MRL also agreed to withdraw legal proceedings on receipt of the payment.

However, Spic has not made the payments to MRL for close to two years now which has led to inordinate delays in the commencement of project work.

With no positive response from Spic, lenders have been forced to take legal action against Spic Petrochemicals Ltd.

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