Contempt Notice Against Indusind, Drt Official

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IndusInd Bank Ltd and a recovery officer of the Debt Recovery Tribunal (DRT) have been served with contempt notice by the ADR Arbitral Tribunal, New Delhi, for going ahead with the auction of the Ram Laxman Hotels' property at Pune, on which Holiday Inn stands.

The DRT recovery officer S Ravinder Yadav had initiated the auction proceedings on a plea from the IndusInd Bank for recovery of the loan amount due to it from Ram Laxman Hotels.

The ADR Tribunal subsequently held that the auction proclamation was "illegal, void, malicious and without jurisdiction tainted with fraudulent motives and abuse of legal process."

DRT and the bank, however, went ahead with the auction process on the last Monday but the Pune civil court stayed it.

However, according to IndusInd Bank officials in Mumbai, the bank has replied to the notice stating that the contempt notice was not applicable on them.

The ADR Tribunal, an autonomous non-profit body corporate constituted as permanent Arbitral Institution under the Arbitration and Conciliation Act of 1996, felt that the auction process was in "utter disregard" of the interim award given by it.

It was added that for the ADR Tribunal, the power of intervention by judiciary has been drastically curtailed and contempt of tribunal has been made punishable as contempt of court, legal experts point out.

The dispute between Ram Laxman Hotels and IndusInd bank relates to a loan taken by the former. The hotel management subsequently sought to get refinance from NRI Lead Bank (NLB) to take advantage of reduced interest rates.

The other creditors of the hotel - Tourism Finance Corporation of India and Industrial Finance Corporation of India - had agreed in principle to transfer the liability of Ram Laxman Hotels to NLB.

IndusInd bank, however, did not reply to the offer from NLB, but instead moved DRT at Pune following which the bank approached ADR Tribunal challenging the auction bid.

NLB said that it was ready to take over the liabilities of the hotel and pleaded that the status quo of the property should be maintained to which the ADR Tribunal agreed on its interim order.

With the DRT and IndusInd Bank going ahead with the auction bid, the ADR Tribunal served notices on them saying that they are guilty of contempt of the tribunal. DRT recovery officer Ravinder Yadav and IndusInd bank MD Bhaskar Ghosh have been asked to show cause by August 25, '02 failing which the Tribunal will launch contempt of court proceedings in Delhi High Court, the notice said.