Financial Daily from THE HINDU group of publications
Thursday, Jun 03, 2004
Money & Banking
Court receiver takes control of Mardia properties ICICI Bank hopeful of sale despite DRT stay
Mumbai , June 2
WHILE the Debt Recovery Tribunal (DRT), Ahmedabad, issued an ex-parte order against the sale of Mardia Chemicals property by ICICI Bank on Tuesday, the receiver appointed by the Mumbai High Court has taken charge the of the property.
Sources in ICICI Bank believe that the court receiver can sell the property in spite of the stay as DRT is a lower court; the hierarchy is as follows: DRT, Appellate DRT, High Court and then Supreme Court.
The stay order comes after the Supreme Court Judgement of April 8, which allowed borrowers to approach the DRT freely under the Securitisation Act. DRT, Ahmedabad has stayed ICICI Bank from taking possession of Mardia properties in Surendranagar until the next hearing on July 1, 2004.
This will have no impact on the court appointed receiver, who has taken possession of the multiple properties in Surendranagar, Gujarat and is awaiting a sale order from the High Court.
The order is expected to come in a few weeks, said sources.
A sale, if it happens, will benefit the debenture holders in Mardia Chemicals, which includes State Bank of India, IDBI, UTI and ICICI Bank among others.
The Mumbai High Court-appointed receiver took possession of the multiple Mardia units following the hearing of the case of debenture trustee, ICICI Bank Vs Mardia Chemicals.
This case was taken through the High Court route since debenture holders cannot invoke the Securitisation Act nor can they go through DRTs.
According to analysts, lenders in any case may find it difficult to get a ready buyer for the property.
Even a sale of the entire factory, equipment and property will only help recover the principal amount of Rs 800 crore, which the company owes to several banks and FIs.
The remaining interest component will have to be forgone. But lenders like ICICI Bank have provided for almost the entire exposure excepting a small amount.
So whatever recoveries are made will be a write back and therefore will directly add to the bottom line.
The Ahmedabad-based, dyes and dyes intermediaries company's projects were funded through a combination of loans and debentures.
The group owes over Rs 1,450 crore (including principal of Rs 800 crore and balance unpaid interest) to 22 lenders, including ICICI Bank, Bank of Baroda, Bank of India, Corporation Bank, Union Bank, IDBI, Life Insurance Corporation, IFCI and New India Assurance.
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