The Hindu Business Line : Debt recovery tribunal restrains EID Parry

Chennai April 21 The Debts Recovery Tribunal-I, Chennai, has restrained EID Parry Ltd from running the plant of New Horizon Sugar Mills Ltd, which EID Parry took over in March 2005.

EID Parry bought the assets of New Horizon from the latter's creditors, Indian Bank, for Rs 50.20 crore, after the bank seized the assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

Invoking the Act, Indian Bank gave a notice to New Horizon under Section 13(2) of the Act, stating its intention to seize the assets and giving the borrower sixty days time to pay up its dues (of Rs 28 crore).

Under the provisions of the Act, the notice "shall give details of the amount payable by the borrower and the secured assets intended to be enforced (emphasis added) by the secured creditor... "

In its interim order of April 12, the Presiding Officer of the DRT, Mr V.S. Ravi, granted an interim injunction "restraining EID Parry from making use of all movable and immovable properties including the machinery, equipment... "

The crux of the matter is whether the productive assets of New Horizon Sugar Mills were a part of the notice or not. "We have taken a legal opinion and have been advised that there is no need to stop the plant," a senior official of the company told Business Line today.

A prima facie scrutiny by Business Line of the papers, made available by former promoters of New Horizon, showed that plant and machinery were not covered by the notice.

The Memorandum of Appeal said that the notice "did not include any plant and machineries" and that the "movable and immovable properties, which have not been included in the notice under Sec 13 (2), will have to be returned to the petitioner."

Quoting this in his interim order, the Presiding Officer said: "There is serious force in the contention of the appellants" and "there is a prima facie case and balance of convenience in favour of the appellants."

A senior official of Indian Bank said even if there was an oversight in mentioning the plant and machinery in the notice, nothing could deny the bank's rights in taking possession of the hypothecated assets, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

More Stories on : Courts/Legal Issues | Sugar | Non-Performing Assets

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