The Madras High Court has set aside an order of the DRAT-Subhiksha MD case directive quashed

Source : express News servic :Oct 16,2011

CHENNAI: The Madras High Court has set aside an order of the Debt Recovery Appellate Tribunal (DRAT) quashing the order of the Debt Recovery Tribunal (DRT), which directed the MD of the defunct Subhiksha Trading Services Limited to surrender his passport, thereby preventing him from leaving the country.

Subhiksha had borrowed nearly Rs 222 crore from� the ICICI Bank in Ambattur Industrial Estate in 2005. Company MD R Subramanian executed personal guarantee for the loan amount.� As the company defaulted in returning the loan amount, the bank moved the DRT, which, on September 30, 2010, directed Subramanian to surrender his passport, in an interim order. He moved the DR Appellate Tribunal, which on August 12 this year, set aside the order of the DRT, after holding that the DRT had no authority under law to impound the passport. The passport authority alone was empowered to do so under the Passport Act, the DRAT had held. Aggrieved, the bank moved the Madras High Court with the present writ petition.

Allowing the petition, a division bench comprising Justice D Murugesan and Justice KK Sasidharan noted that Subhiksha had shut its business for several months and it deliberately did not finalise its books of accounts since March 2007 and the accounts had not been audited till 2008.

The company had also borrowed Rs 800 crore from various other lenders and claimed that it had no assets.

It had also transferred various assets to defeat the claim of the ICICI bank and other lenders.

The Bench held that the powers conferred upon the DRT to pass interim orders, particularly under Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFIA), were wide enough to pass the order for impounding the passport and quashed the DRAT order.