Shcil Questions Drt Order Rationale

The Stock Holding Corporation of India Ltd (SHCIL) questioned the rationale behind Debt Recovery Tribunal's (DRT) order directing SHCIL to furnish security of Rs 24.4 crore claimed by IndusInd Bank failing which its properties would be attached.

SHCIL managing director & CEO B V Goud said the corporation issued the disputed cheques to Harish Chandra Biyani, a city-based share broker who was among the three defaulters of the Calcutta Stock Exchange during the payment crisis, and hence the alleged failure of IndusInd Bank in recovering the amount from SHCIL did not arise at all.

However, he hastened to added, SHCIL would shortly take legal recourse challenging the DRT order "at proper forum." Legal sources said the corporation would possibly move to the Calcutta high court. IndusInd Bank has already taken a caveat from the court meaning SHCIL would not able to get an ex-parte order.

SHCIL issued three forward dated cheques to Harish Chandra Biyani for the value of shares which he discounted at IndusInd.

Trades on 7.20 lakh shares of DSQ Industries were executed under the cash and pay out scheme of SHCIL.

In the petition filed before DRT under section 19 of the Debt Recovery Tribunal Act, IndusInd Bank alleged that the three cheques were dishonored on presentation and therefore prayed for recovery of the money from both the parties.

The shares were sold by Harish Biyani to Biyani Securities, another group broking outfit. Later Calcutta Stock Exchange expunged a similar trade between Harish Chandra Biyani and Biyani Securities describing it "collusive in nature."

When asked why the corporation did involve in such collusive trades, Goud pleaded ignorance about the identity of the buyer. He also said the corporation did not suspect the trading on DSQ Industries "as the scrip was very much active then."

On the other hand, he put the blame squarely on the local bourse authorities. "Indeed, CSE expunged a trade after allowing a handful of similar trades," he alleged.

IndusInd obtained an ex-parte order from DRT preventing SHCIL or persons connected to it from transferring, disposing or encumbering its properties and investments in 17 instruments, including shares in National Stock Exchange (NSE) and Investors Services of India (ISI).

The order has attached SHCIL's 5 acre plot with unfinished building at Shilpata in Mumbai. In addition to SHCIL's shareholding in NSE and ISI, the tribunal has also attached investment of the corporation in bond funds of UTI and LIC and various government securities as well.

In the petition filed before DRT under section 19 of the Debt Recovery Tribunal Act, IndusInd Bank alleged that the three cheques were dishonored on presentation and therefore prayed for recovery of the money from both the parties.

Meanwhile, SHCIL is set to tie up with the government to sell all its products, including sell-n-cash and loan against shares, at post offices, according to Goud.