DRT cracks the whip again

Abhay Vaidya,

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PUNE: The Debt Recovery Tribunal (DRT), Pune,
which in May created a stir by attaching state
government properties and treasury account, has now
taken the extraordinary step of initiating proceedings
 to issue arrest warrants against the members of prominent
industrialist family in the city.

The DRT has upheld the State Bank of India’s (SBI)
application for the “arrest and detention” of 11 members
of the Ashok Lunkad family (owners of the Nav Maharashtra
Chakan oil mills) for failing to clear dues of Rs 16.60 crore
with the SBI’s industrial finance branch,Wakdewadi, Pune.

DRT recovery officer S. Ravinder Yadav issued his order on
Wednesday, stating that jail warrants against 11 members of
the Lunkad family for six months’ detention in civil prison
 would be issued once SBI deposits “subsistence allowance”
with the tribunal, “equivalent to a period of one month in
the first instance, and thereafter, every month in advance”.
 “We have decided to deposit subsistence amount for 15 days
initially.

The main grievance of the bank is that the Lunkads are trying
 to create hurdles in the recovery process,” advocate Ramesh Ganbote,
 representing SBI, Representing the Lunkads,
advocates Rajendra Jagtap and M.M. Joshi filed two separate
 applications with the DRT on Thursday, appealing for a “stay”
against the order.

While Jagtap has appealed for a 30-day stay, Joshi, along with one
 of the defendants, Nitin Lunkad, has appealed for a 10-day stay “for
 the purpose of filing an appeal.” The DRT is scheduled to hear these
 applications on Friday.

The SBI’s application for the “arrest and detention” of the Lunkads
relates to its case against the Nav Maharashtra Chakan oil mills, Ahmednagar,
 and 11 partners in the firm, namely, Ashok Mohanlal Lunkad,
his brothers Vijay and Subhash Lunkad, Abhijit Ashok Lunkad,
Shantilal Ratanchand Lunkad, Pravin Surajmal Lunkad, Tushar
Shantilal Lunkad, Mohanlal Pranlal Lunkad, Nitin Mohanlal
Lunkad, Atul Ashok Lunkad and Mitesh Subhash Lunkad.

The case relates to the default on extension of Rs 10 crore in May, 1994,
 under the cash credit facility and import letter of credit.
The loans were extended against a number of properties mortgaged
 with the bank by the Lunkads.

This is the first such action against a prominent Pune-based
industrialist family taken by the DRT, which established an
independent presence in Pune two years ago.

Pointing out that the purpose of the DRT is to uphold the
“Recovery of Debts due to Bank and Financial Institutions Act, 1993”,
 Yadav in his order has said, “If a softpedalling policy on the matter
 of sentence is adopted in a case of this nature, it will not only
send wrong signals to other defaulters, but also the public will
lose faith in banking institutions.”

Yadav also said, “A deterrent sentence of maximum period
of six months would be commensurate and just keeping in
mind” that the defaulters “are illegally retaining the huge
 amount of Rs 16.60 crore of public money in spite of
having sufficient means to discharge their liability.”

The DRT Pune’s previous actions forced the state government
 to compromise with the IDBI (Industrial Development Bank of India)
and other lending institutions to the tune of Rs 200 crore and the
 auctioning of the prominent Holiday Inn premises and Hotel Amir
premises owned by prominent city-based businessman, R.L. Bhojwani.

Source:TOI