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UTI Bank's contention is that it have got the decree from the DRT before the matter went to the Kerala High Court and, therefore, even if the order is in favour of settlement sought by secured creditors, UTI Bank should be kept out.

Mumbai , June 20

UTI Bank may sell the land mortgaged by BPL to recover its dues, if the company does not pay up by August, as the Debt Recovery Tribunal has awarded a decree in favour of the bank, said Mr B. Gopalakrishnan, Senior-Vice-President and Head-Law, UTI Bank.

"DRT has fixed the date till August. If by then the company does not return our money, we will sell the land in Pune, which has been mortgaged to us," he said.

UTI Bank, which has an exposure of Rs 77 crore, is among the consortium of banks that have lent money to BPL. The total amount lent to the company is roughly around Rs 1,200 crore, he said.

UTI Bank was the first among the consortium of banks to approach the DRT against BPL in August 2004.

Prior to that the company had tried for a settlement of Rs 44 crore with the bank.

Mr Gopalakrishnan said, "The company has admitted to a liability of Rs 44 crore and we got a decree on admission for that amount. We got the sale certificate for their land."

The matter is still being heard for recovering the rest of the money.

Subsequently, in September 2004, BPL approached the CDR (corporate debt recovery) mechanism, where it could muster majority.

However, UTI Bank remains out of it as the decree had already been awarded. Some of the other banks that opposed the CDR are Bank of Rajasthan, IndusInd Bank and BNP Paribas, he said.

Following this, BPL approached the Kerala High Court and filed a petition under Section 391, which allows for a compromise with the secured creditors.

As per the directive of the High Court, a meeting was held at Palakkad and put to vote, where 89 per cent of the secured creditors voted in favour of the settlement.

About the likely situation of the Kerala High Court approving the settlement, Mr Gopalakrishnan said it is a legal question, if under Section 391 petition whether the High Court can stay the DRT order. UTI Bank's contention is that it had got the decree from the DRT before the matter went to the Kerala High Court and, therefore, even if the order is in favour of settlement, UTI Bank should be kept out of it.

Mr Gopalakrishnan said, "Our decree has been awarded prior to the company approaching the High Court."

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