NEWS BAD DEBT INDIA
NEW DELHI: India’s battle against the world’s worst bad-loan ratio is being stalled by some unforeseen parties: regulators and federal investigators.
Here below are some instances of government agencies’ tussles with the process.
The markets regulator moved the Supreme Court in June demanding that securities law must prevail over the insolvency rules. The case was about seized assets of HBN Dairies and Allied Ltd., which SEBI said violated norms for raising funds from the market. The regulator attached properties of the company, that was in the bankruptcy process, to raise money for refunds to investors. The top court initially halted the process, but a week later allowed it to continue without using the properties seized by SEBI. The court will decide in July. SEBI didn’t respond to emails seeking comment.
The federal anti-money laundering agency moved an appeals court in June challenging a bankruptcy court’s order asking the agency to release seized land and properties of Sterling SEZ & Infrastructure Ltd. The confiscations came as the wider group faced multiple probes for loan frauds worth 81 billion rupees ($1.17 billion) and its founder fled the country, according to the agency’s submissions to the bankruptcy tribunal. The appeals court agreed to hear the directorate’s petition and put on hold the bankruptcy tribunal’s February order that allowed using frozen assets to clear dues to creditors. The enforcement directorate’s spokesman said a Delhi high court ruling made it clear that insolvency law can’t overrule anti-money laundering law.
In a June verdict, a bankruptcy appellate court allowed the sale of Ramsarup Industries Ltd. machinery under bankruptcy resolution, rejecting a customs department challenge. The tax department had seized the assets claiming pending dues, and the litigation has delayed resolution by over a year. Various arms of the tax department are also fighting cases where its claims for dues were rejected. In many instances, such as those involving Rainbow Paper Ltd., and Aryavart Chemicals Pvt. Ltd., implementing resolution plans depends on the bankruptcy appeals court’s final decision. Representatives for the tax department didn’t reply to requests for comment.