Court notice to 2 UCO officials over Securitisation Act

A district court in Ahmedabad has issued notices against two top officials of the regional office of UCO Bank for criminal breach of trust for illegally issuing a notice to a customer under the Securitisation Act. The officials later withdrew the notice. The hearing of the case has been scheduled for March 29.

Advocate Devesh Bhatt, on behalf of the complainant Sejalben Patel, filed a case in the district court, alleging that two officials of UCO Bank - T Mathan, chief officer, regional office, and Pradeep Mehta, deputy chief officer, regional office, first illegally issued a notice under the Securitisation Act and then withdrew the notice after the matter was brought to the notice of the Reserve Bank of India.

"The notice under provisions of the Securitisation Act can be issued only after the loan is termed as a non performing asset. In this case, the notice under the Securitisation Act was issued although the loan was not termed a non performing asset," said Devesh Bhatt, advocate for the complainant.

The proprietorship, Ms Ronak Enterprises, had taken a loan and credit facilities from UCO Bank, Ellisbridge, Ahmedabad branch. The loan of Ronak Enterprises, run by Ronak Patel, was secured by the guarantee of the complainant, Sejalben Patel, Ronak's wife.

The complainant had, however, not offered valid security to the bank, therefore the complainant was not a secured guarantor, the court complaint said.

In December 2002, the accused issued a notice under Section 13 (2) of the Securitisation Act to Ronak Enterprises, with a copy to the complainant, calling upon them to pay the debt.

According to the complaint, the complainant accompanied her husband on several occasions to the bank, but the bank officials were not interested in accepting a reasonable offer of repayment of dues.

As of December 3, 2002, the firm owed the bank Rs 74.53 lakh and the complainant had agreed to sell off their showroom and pay back part of the outstanding amount, while repaying the remaining amount in installments.

On May 7, 2003, Patel's advocate sent a letter to the Reserve Bank of India, contending that the bank officials had violated the powers under the Securitisation Act while issuing the notice. The complainant submitted in the court complaint that the bank has so far not replied to the RBI, which had called from comments of UCO Bank on the matter.

On November 11, 2003, the chief officer of the regional branch wrote a letter to the complainant, withdrawing the notice issued to the company under provisions of the Securitisation Act.

The notice, issued to Ronak Enterprises on December 3, 2002, and acknowledged by the firm on December 12, 2002, has been withdrawn as the notice was issued before declaring the loan an NPA, the letter said.