New Delhi, Dec. 13: The Supreme Court today allowed ICICI bank to take over Mardia Chemicals’ Surendar Nagar unit in Gujarat under the securitisation law.
This is the first-ever takeover after the Bill was passed by Parliament a couple of weeks back. However, the apex court told the bank not to sell or create any third-party interest in companies they seize.
The order was passed by a bench of Justices V. N. Khare, Ashok Bhan and Arun Kumar in the course of hearings on the Act, which aims to recover the Rs 1,50,000 crore that companies owe financial institutions and banks.
The acquisition of Vatwa unit owned by Mardia group, which has taken loans worth Rs 400 crore, has been upheld by the court, with the restriction that it should not be sold off or be embroiled in third-party interest.
The flood of petitions, bundled from lower courts across the country to the apex court, have challenged a provision of the Bill that allows lenders to take over management of a company and sell assets to recover their money.
The argument advanced by several companies is that they will suffer “irrepairable or irreversible loss” if they are in a position to repay the loan at a later stage. Many have even accused banks and FIs of making loan calculations against the contractual terms.
Since the Act is yet to win President assent, the judges observed that there was no need to lift the stay on it now. “Let the President give his assent to the Bill passed by Parliament. Our stay will continue till then.” The apex court has restrained banks from taking over the management and selling units — not the Bill itself.
The lawyer for Amulet International, another defaulter, filed a rejoinder arguing that “notices for take over (of several defaulting companies' units) have been sent selectively”, and that this has been done when the government has not framed rules for recovery.
The rejoinder said that there was no “measure of control on the price at which the assets of the borrower will be sold”.