Early Hearing Of Sail Case Sought

Following the Union Cabinet's decision yesterday to waive Rs 5,450 crore loans to the Steel Authority of India Ltd from the Steel Development Fund (SDF), private sector steel major Ispat Industries plans to seek an early hearing of its appeal filed with the Supreme Court on Monday.

"We plan to make a mention of the appeal with the Chief Justice on Thursday and will seek an early date given the urgency of the matter," Gautam Maitra, cousel for Ispat told Business Standard.

"As per the present notification, the SDF is administered by a board of trustees. The board is required to preserve the corpus of the fund and the interest thereon. Hence, under the present law, the government cannot write off the loans, as this would amount to the writeoff of around 90 per cent of the fund's corpus," the Ispat counsel said.

 

The government can, however, amend the notification to accommodate a writeoff.

Ispat had earlier moved the Calcutta High Court against any government decision to waive the SDF loans to SAIL. The Calcutta High Court had felt that the government was within its rights to waive the loan, following which Ispat has gone on appeal to the Supreme Court.

Ispat's case revolves around the contention that the government has no power to waive the loan in case of SAIL, and that it should, under no circumstances, waive the SDF loan in the case of Tisco, which is a private sector company. Tisco has Rs 1,700 crore of SDF loans outstanding. A loan waiver would make it difficult for other private sector companies to compete with them in the market place.

Ispat claims that since the SDF was created out of public funds to help in technological upgradation of the industry, the government has no jurisdiction to write off the loans. Interestingly the Calcutta High Court ruling had said that post-1992, the SDF money can be used by the other private sector steel companies.