New Delhi, Nov. 12: The Supreme Court will take up for hearing on November 25 the Securitisation Reconstruction Ordinance cases in which industries owe banks and financial institutions over Rs 1,50,000 crore.
The Ordinance has empowered banks and financial institutions to attach, take over the management and/or sell the mortgaged properties of the industrialists.
The Ordinance has been challenged by several defaulting companies in high courts. To avoid conflicting verdicts, all petitions have been clubbed together by the apex court.
A three judge bench of Justices V. N. Khare, Ashok Bhan and Arijit Pasayat said in a brief order that no high court should entertain any petition in the matter and continued the stay on recovery procedures. When the matter was raised by ICICI Bank, the bench said that the matter would be taken up on November 25.
Several industrialists have estimated loan dues of Rs 1,50,000 crore, which banks and other financial institutions keep under the head non-performing assets (NPA).
Finance minister Jaswant Singh had called this “NPA” as an euphemism for wiping off loans. The government promulgated the Ordinance since a Bill could not be moved in Parliament. It empowers even a bank chief manager to attach the property of a borrower, allow it to manage the unit or sell it to a third party.
Former law minister Arun Jaitley, who had actually brought this law, today appeared for ICICI Bank and told the court that the “mind-boggling” sums of arrears by several industrialists could not be recovered at all, but for the Ordinance.
The case is being argued by leading legal and financial brains of the country, including former finance minister P. Chidamabram (for Amulet International), Congress Rajya Sabha member and senior counsel Kapil Sibal (for Mardia Chemicals) besides Jaitley and additional solicitor general Mukul Rohtagi (for the Union government).
Advocate on record for IDBI, Bharat Sangal, said Rs 1,50,000 crore is blocked as NPA, and the Gujarat-based Mardia Chemicals alone owes about Rs 1,400 crore.
He supported the Ordinance, Section 13(2) of which says a notice of 60 days should be given to a defaulter. After that, under Section 13(4), either the management is taken over by the bank or the financial institution concerned or it is sold to a third party.
Another counsel Deva Shekhar for the Amulet International countered this argument, contending there was no remedy or relief for an industry which could win on appeal or whose debt is wrongly assessed, as its unit had already been sold to a third party.