The Hindu : Tribunal attaches two offices of Mantralaya

Online edition of India's National Newspaper
Thursday, Jan 09, 2003

Other States

Other States - Maharashtra

Tribunal attaches two offices of Mantralaya

By Our Special Correspondent

MUMBAI JAN. 8. Disinclination to represent its side before the Debt Recovery Tribunal but only appeals to stay the proceedings has led to the attachment of two offices of the Secretary, Cooperation Department and the Secretary, Textiles, of the Maharashtra Government for not paying up Rs. 50.69 crores to financial institutions which loaned, on Government guarantees, to a cooperative.

The Government, according to the DRT, did not "substantiate the claims" that the property of the borrowing entity was adequate to recover the debt. Now, attachment notices are out and the Government has to explain within 15 days why the DRT should not attach the Maharashtra Government's account with the Reserve Bank.

The DRT has not issued any notice but actually ordered attachment of the two offices for failure to back its sovereign guarantee by action when called upon to do so. The loans were made out to a cooperative sugar factory in Sindhkheda, which, though run by a Minister of State of the Nationalist Congress Party, Hemant Deshmukh, went under within a year.

When the financial institutions called in the loan, it was found that the assets pledged were lower in value, perhaps, pointing to faulty assessments at the time of loaning. The Government thinks that the assets of the borrower should be seized first.

Upset over the move, the Government is contemplating an appeal, having rested so far in the belief that the Finance Minister, Jayant Patil's meetings with the financial institutions would find a way out of such situations but the DRT sprang a surprise by its January 6 order. Over a year ago, the order said, the Maharashtra Government was asked to reply to the attachment plea by the financial institutions, but it "did not file a reply" and an order for attachment of properties of the cooperative was issued "leaving aside the Government properties". Later, notices on the basis of the application from the financial institutions were re-served on the cooperative and the Government on the issue of attaching their properties.

Printer friendly page
Send this article to Friends by E-Mail

Other States

Stories in this Section

Tribunal attaches two offices of Mantralaya