| The Delhi High Court has come down heavily on willful loan defaulters, who in the guise of borrowing money, siphon off funds to their secret accounts and declare their units as sick.
|
| |
| According to the court, outstanding loans of banks and financial institutions (FIs) to the tune of Rs 1,34,000 crore still remain unpaid. "Unless repayment of the loans is done, the bank or the FI cannot lend money to new businessmen and new industrial units cannot be set up...," it said.
|
| |
| While observing this in a petition seeking directions to restrain Oriental Bank of Commerce from initiating debt recovery proceedings, a division bench comprising Chief Justice Markandeya Katju and Justice Madan B Lokur said, "Non-recovery holds up the industrialisation of our nation, which is a top priority for our nation...it is well known that in our country, many unscrupulous businessmen borrow money from banks and FIs and divert it to secret accounts, and declare their unit sick. In this way, scarce financial resources of the country are siphoned off. This court cannot approve of such malpractices."
|
| |
| Refusing to exercise discretion under Article 226 of the Constitution, the court said, "...interfering with such recoveries does incalculable harm to the economy and will be continued to be done if persisted by the courts, because new businessmen cannot get loans if the borrowers have not repaid."
|
| |
| The writ petition was filed by one D K Gupta, seeking permission to avail and resettle the account of its partnership firm "Indo Pacific Trade Corporation", under different settlement scheme issued by the Reserve Bank of India in September 2003.
|
| |
| Prior to the filing of the petition, Gupta had arrived at a settlement as per the 2000 scheme under which, the bank had agreed to accept Rs 1.43 crore against due amount of Rs 1.61 crore over a period of one year. However, the petitioner had failed to pay and had sought another settlement, which was turned down by the bank.
|
| |
| Emphasising on need for fiscal discipline, the judges said, the loan had to be repaid in accordance with the loan schedule agreed between the parties.
|
| |
| Rescheduling of the loan is in the sole discretion of the bank or the FI which granted the loan and the court cannot compel it to reschedule the loan, the judges said, adding, "the matter is purely contractual and a party has to abide by the agreement which he has entered into."
|
| |
| Terming the petitioner as willful defaulter with malafide intention, the court said that going by the scheme itself, the 2003 scheme didn't apply to willful defaulters and a party which had availed one settlement cannot be allowed further settlement. |
| |
|
| |
