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Defamation cry over loan recovery order

Mumbai, Jan. 12: Embarrassed by the Debt Recovery Tribunal’s order to attach the properties of two government offices for defaulting on a cooperative loan, Maharashtra chief minister Vilasrao Deshmukh has accused the Centre of trying to defame the state government.

The chief minister — pushed on to the backfoot after the bad publicity he got in the wake of the tribunal’s order — expressed surprise at the eagerness of IFCI Ltd to invoke the counter-guarantee to recover the Rs 50.69 crore loan given to Sindhkheda Cooperative Sugar Mill.

The tribunal passed an order on January 6 seeking to attach the offices of the secretary, textiles, and his counterpart in the cooperatives department for failing to repay the loan.

The mill is under the charge of Hemant Deshmukh, a Nationalist Congress Party leader and minister of state for labour in the Congress-led Deshmukh government.

Deshmukh, however, was eager to portray a “hidden conspiracy” on the Centre’s part to “defame” the state government. “The move by the IFCI, which is controlled by the Centre, to attach the properties may be an attempt to defame the state government,” the chief minister said. Deshmukh added that he would take up the matter soon with Union finance minister Jaswant Singh.

The sate government, which is yet to chart out a course of action following the debt tribunal’s order, also said it would appeal before a higher body against the move.

Lashing out at the IFCI, Deshmukh said while other financial institutions like ICICI and IDBI have been cooperating with the state government, “it is a surprise that the IFCI has chosen this path”. The chief minister said he had not expected the IFCI “to go this far”.

“The financial institution should have exercised restraint, as it was dealing with a state government and should have prevented the defamation of Maharashtra,” Deshmukh said.

The tribunal decided to attach the two offices after it calculated that the sale of machinery and land belonging to the sugar mill would fetch only about Rs 5.19 crore.

Although Deshmukh said he would approach a higher body to fight against the debt recovery tribunal order, tribunal officials maintained that the government does not have much of a case. Various government-backed cooperatives owe banks around Rs 750 crore.

Tribunal officials said the government has to pay up and that, in the process of other banks approaching it for recovery of loans, the tribunal will not hold itself back from taking the same step again.

Sources in the tribunal said some other financial institutions have appealed to it to recover government-backed loans from defaulting cooperative units and to initiate steps to attach government properties.

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