Auction sales of bank properties - Chennai

Source ; Indian Express Chennai

Guj. HC reserves order on IT Dept’s challenge to SARFAESI Act

Source :08.03.2011 | 14:49 Ahmedabad:Tejas Mehta:law et al news



The Gujarat High Court has reserved it’s judgment on the issue whether Income Tax Department has first charge over a secured property or not.


 The issue pertains to the Income Tax (IT) authorities’ challenge to provisions of section 13 of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act against provisions of Section 281 of Income Tax Act.


The court comprising Chief Justice SJ Mukhopadhaya and Justice JB Pardiwala reserved the order after hearing the case of Tax recovery officer vs Industrial Finance Corporation of India (IFCI) and another.


The tax department challenged the IFCI’s actions of taking over the possession of properties of one Parekh Platinum Limited.


As per the IT department’s case, the assessment was framed for the assessment year 1996-97 as a result of which, Rs 242 crores plus interest, penalty and other charges were due to be recovered from Parekh Platinum Limited which is based in Gandhinagar district.


In December 2004, the authorities passed attachment order against the properties of PPL. This development was brought to the notice of IFCI.


 The tax department claimed that despite bringing it to IFCI’s notice, it took possession of the properties which were attached. It further claimed that PPL sold one of it’s properties which was attached by the authorities.


The tax recovery officer in the petition claimed that as per section 281 of Income Tax Act, the charge created by PPL in favour of IFCI is required to be declared void as against the claim of IT department.


They further claimed, “Serious and irreparable prejudiced would be caused if IFCI goes on with the auction of the properties.”


The court had earlier noted that the question whether Income Tax Department has first charge over the property in question, cannot be determined by the Debt Recovery Tribunal as it only has power to decide whether measures taken under the provisions of Securitization Act were in accordance with the Act or not. 


The court had later admitted the appeal.

Rising NPAs of SBI group come under Parliamentary panel lens

Source :business Line :NEW DELHI, FEB. 22:2011 

A Parliamentary Panel has asked the Government to assess the reasons for rising non-performing assets (NPAs) of the State Bank of India (SBI) group. The Government has been asked to spell out the policy on merging the subsidiary banks with SBI.

The Government must also do an in-depth analysis of the issues relating to merger and consolidation of public sector banks in general, the Parliamentary Standing Committee on Finance headed by Mr Yashwant Sinha, said in a report tabled in Lok Sabha today.

 The Standing Committee went into the State Bank of India (subsidiary banks laws) amendment Bill 2009, which was introduced in Lok Sabha in December 2009.

A recent Reserve Bank of India (RBI) inspection report is also understood to have expressed concern over the rising NPAs in SBI, which is the country's largest commercial bank.

On allowing SBI subsidiary banks and other public sector banks to raise equity capital by way of ‘rights issue' of shares as well, the Standing Committee said that it expects appropriate amendments to be carried out in the Bill and also the laws regulating the public sector banks so as to enable them to raise capital through rights issue.

AD HOCISM IN POLICY

Meanwhile, the Standing Committee has, in its report, noted that there is a strong element of ad hocism in the policy stance and approach of the Government in bringing in legislative changes in the legislation regulating the SBI and its subsidiaries in particular. 

For instance, though the amendments carried out earlier vide the State Bank of India (subsidiary banks laws) amendment Act 2007 remain to be given effect to, and the present Bill is pending before Parliament, the Government has embarked on merging two of the subsidiary banks with SBI, the Panel report pointed out.

The report also said that the submission that “proposal of merger come from the management of banks themselves” with the Government playing a supportive role as a common shareholder is, in the opinion of the committee, indicative of ambivalence in the Government's approach on merger and consolidation of banks.

The Standing Committee has also pointed out that amendments remain to be made in the State Bank of India Pension Fund Rules. This is detrimental to the retirees of the merged subsidiary banks, the report said.

Maharashtra government to pay Rs 30,000 to IFCI, IDBI for its "lethargy, negligence, in-aptitude and carelessness".

Source : Business Standard January 18,2003



DRAT asked Maharashtra government to pay Rs 30,000
 to IFCI, IDBI for its "lethargy, negligence, 
in-aptitude and carelessness".


The Debt Recovery Appellate Tribunal (DRAT) has ordered the Maharashtra government to pay Rs 30,000 as "costs" to IFCI Ltd and the Industrial Development Bank of India (IDBI) within a day for its "lethargy, negligence, inaptitude and carelessness".

The tribunal has also been asked to deposit Rs 28 crore within two months, before its appeal against the Mumbai debt recovery tribunal (DRT) order can be taken up for hearing.

Justice Pratibha Upasani, chairperson of the DRAT, came down heavily on the state government saying: "Apparently, a false statement has been made by the state government that it came to know of the DRT order in 2002."

The DRAT orders were issued on Wednesday and Friday on the applications filed by the state government for a "condonation of delay" in filing its appeal against the DRT's order of July 10, 2001, and an application for waiving the requirement to deposit 75 per cent of the decreed amount before its appeal could be taken up for hearing.

The state government had sought a waiver of the condition that 75 per cent of its dues decreed by DRT-II, Mumbai, be deposited within two months before the "compliance hearing" could be taken up by the DRAT on March 17, 2002.

Says a legal source: "The waiver can be granted only if the appellant can prove his economic condition is weak.  The Maharashtra government counsel made no such submission in the application."

Justice Upasani said: "In the application for condonation of delay, government counsel Ranjan Dharmadhikari submitted though the delay was of 466 days, it was not intentional.  He submitted the judgement and order were passed ex parte and the state government came to know about it on October 10, 2002.  It is, therefore, evident the appellants did not respond to the proceedings."

The judge's order said: "The application for condonation of delay is hereby allowed subject to payment of Rs 30,000 equally to IFCI and IDBI by Thursday."

Can a NPA declared company pay dividend ?

Source ;oneindiamoney:Monday, February 21, 2011, 12:04


Vikas WSP Ltd has informed BSE that:

"In the month of March 2009, due to world recession, realizations of export bills were delayed more than 3 months. As per Reserve Bank of India regulations, if the bills are delayed more than 90 days (3 months), the account has to be declared Non - Performing Assets (NPA). SBBJ declared the account of NPA in March 2009 and arecovery suite was filed, in DRT, Jaipur and obtained an interlocutory order from DRT restraining the company from distribution of dividend to its shareholders. 


Subsequently, the realizations of all the bills were received by the SBBJ bank, Company filed damages case against the bank and also filed an appeal against the order of lower Court in Appellate Court.


 On December 08, 2010, due to settlement with bank, the entire issue has been resolved with mutual agreement. Now matter ended. Appellate Court has ordered to distribute dividend within 3 months from the date of order i.e. upto March 07, 2011.

Due to mutual settlement between Bank and Petitioner (Vikas WSP Limited), the petitioner has not pressed the damages claim and therefore, the demand of damages claim is closed without any direction.

Now the company can distribute the dividend for the years 2008-09 and 2009-10 as approved by its shareholders within a period of 3 months from the date of order.

In view of the above order the last date of payment of dividend comes out to March 07, 2011. 


However, company has already distributed dividend for the year 2008-09 and dividend for the year 2009-10 will be distributed latest by March 07, 2011 which is the last date as per Appellate Court order.

Can a NPA declared company pay dividend ?

Source ;oneindiamoney:Monday, February 21, 2011, 12:04


Vikas WSP Ltd has informed BSE that:

"In the month of March 2009, due to world recession, realizations of export bills were delayed more than 3 months. As per Reserve Bank of India regulations, if the bills are delayed more than 90 days (3 months), the account has to be declared Non - Performing Assets (NPA). SBBJ declared the account of NPA in March 2009 and a recovery suite was filed, in DRT, Jaipur and obtained an interlocutory order from DRT restraining the company from distribution of dividend to its shareholders. 


Subsequently, the realizations of all the bills were received by the SBBJ bank, Company filed damages case against the bank and also filed an appeal against the order of lower Court in Appellate Court.


 On December 08, 2010, due to settlement with bank, the entire issue has been resolved with mutual agreement. Now matter ended. Appellate Court has ordered to distribute dividend within 3 months from the date of order i.e. upto March 07, 2011.

Due to mutual settlement between Bank and Petitioner (Vikas WSP Limited), the petitioner has not pressed the damages claim and therefore, the demand of damages claim is closed without any direction.

Now the company can distribute the dividend for the years 2008-09 and 2009-10 as approved by its shareholders within a period of 3 months from the date of order.

In view of the above order the last date of payment of dividend comes out to March 07, 2011. 


However, company has already distributed dividend for the year 2008-09 and dividend for the year 2009-10 will be distributed latest by March 07, 2011 which is the last date as per Appellate Court order.

SC: Borrowers must approach tribunal, not high court

Source : Business Standard:M J Antony / New Delhi February 14, 2011, 0:55 IST


The Supreme Court (SC) stated last week a borrower and his guarantors who have been served with a notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act has a remedy under the Act and should not rush to the high court. In this case, Kanaiyalal vs State of Maharashtra, State Bank of India advanced loans against mortgage of certain property. The loan was declared as non-performing asset and the bank proceeded to take over the mortgaged property. The guarantors moved the Bombay high court against the bank’s move. It rejected the petition stating they had tried to avail of the remedy earlier by moving the debt recovery tribunal The excise commissioner appealed to the SC. It quashed the tribunal’s order.


Permanently fixed furniture too subject to excise 

The SC ruled last week central excise duty can be levied on furniture permanently fixed to the walls or ground. It set aside the decision of the Customs, Excise and Service Tax Appellate Tribunal, Bangalore, which took a contrary view in the case, Commissioner vs Mehta & Co. This Mumbai company was engaged in interior decoration of luxury hotels. It entered into turn-key contracts with its clients and furniture was part of the work contract. When the revenue authorities demanded excise duty, it protested the woodwork was carried out in the premises of the hotels and they were permanent fixtures. They cannot be removed without causing damage to the goods or cannibalisation. When the contention was rejected, the firm moved the tribunal, which accepted its argument.

A director of a company should not be dragged to a criminal court when documents prove he was not responsible for issuing cheques which were dishonoured, the SC stated last week. The Calcutta high court had asked a former director of Rifa Healthcare (India) who had resigned from the company to stand trial for the issuance of 18 cheques. He showed from documents he had left the company and therefore the case against him should be quashed. But the high court insisted it was his duty to show the trial court he had indeed quit the company. Therefore, he should face the trial first. He appealed to the SC against the order. The SC set aside the ruling in the case, Harshendra Kumar vs Rebatilata Kole, stating it was evident from the records of the company and the registrar of the companies he had left the firm at the time of issuing the cheques.

Appeal over violation of rules on storing imported good

The SC last week dismissed the appeal of M/s SBEC Sugar Ltd against the Bombay HC order allowing the customs authorities to charge dues for keeping imported goods in the warehouse beyond the permitted time. The firm had imported capital goods for its unit. The goods were kept in the warehouse under bond. After the expiry of the period, the firm applied for extension of the facility. Meanwhile, the government enlarged the Export Promotion Capital Goods Scheme to cover agro-based industries. The sugar firm availed of this facility and claimed exemption. The authorities rejected the request. The importer moved the high court, and later appealed to the SC, without success. The SC judgment clarified the benefit of exemption granted under the export promotion scheme would not be available to the firm.

Petition on trademark dismissed

The Madras high court last week rejected the petition of Crompton Greaves Ltd seeking a trade mark injunction against Salzer Electronics Ltd in a dispute over the use of the logo CG. Salzer, an Indian company, was a third party manufacturer for Crompton Greaves of electrical goods. Later, Salzer manufactured similar goods for a British firm, Europa Component & Equipment plc with trademark MCG. The latter trade mark is owned by a European company called Motor Control and Industrial Switch Gear.

Salzer sent its goods with MCG mark to UK. The high court stated that since the goods were sent to UK on Europa’s orders, with a mark registered there and to be sold abroad, there was no cause for injunction. Moreover, the mark was not visible on the face of the goods unless the outer casing was removed.