Supreme Court To Decide On Npa Ordinance

The fate of the Securitisation Ordinance will now be decided by the Supreme Court. The apex court has admitted a petition filed by Ahmedabad-based Mardia Chemicals to transfer the cases filed by it in the Delhi High Court against notices sent by banks and financial institutions to the company under the ordinance.

As a result, all similar petitons filed in the Delhi High Court have been adjourned sine die till the Supreme Court hands out its verdict.

A number of petitions came up for a hearing in the Delhi High Court today against the ordinance from companies including Usha India, Givo Ltd and C.T. Cotton Yarn Ltd.

 

Mardia Chemicals had filed four petitions in the Delhi High Court challenging notices sent to it by banks and financial institutions under the Securitisation Ordinance.

Meanwhile, the legal counsel appearing for the banks and financial institutions today told the court that no action would be initiated against the companies which had filed the petitions till the Supreme Court gives its judgement.

Sources with banks and FIs said that they will go slow on taking over the assets of companies to whom notices had been issued.

They said that buyers for a large number of projects had been identified but now that loan defaulters have taken legal recourse the mood has been dampened a little.

"Even the buyers are adopting a wait and watch policy and therefore we will have to wait for the courts judgement before taking further action," said an institutional source.

Bank and FI chiefs had met in Mumbai recently to chalk out an action plan to recover dues from loan defaulters. Bankers said that one of the main issues on the agenda was to keep the flock together as loan defaulters could misuse any differences between banks and FIs to their advantage.

Banks and FIs have issued a large number of notices to defaulters following the promulgation of the Ordinance in June this year. The government subsequently introduced a Bill in Parliament, which could not be cleared in the monsoon session, and had to subsequently repromulgate the Ordinance.