CHENNAI: Expressing concern over the way a one-time settlement of Rs 14 lakh was reached for default on a loan amount of Rs 62 lakh, the Madras HC observed the settlement reeks of ‘malafide intentions’ and shows there is more to the entire transaction than meets the eye. The deal was rejected by the Union Finance Ministry.
The first bench of Chief Justice Munishwar Nath Bhandari and Justice D Bharatha Chakravarthy, when a writ appeal came up for hearing, took suo motu cognisance of the entire issue pertaining to the one-time settlement and asked why a vigilance inquiry and registration of case should not be ordered.
The matter pertains to a loan default committed by Virudunagar-based Pandian Extractions Limited which availed a loan of Rs 62 lakh in 1992 from Industrial Investment Bank of India (IIBI). After default of repayment, the bank initiated action for recovery.
However, the company mooted a one-settlement of Rs 14 lakh in 2010, which the bank agreed to initially. The company paid the said amount but it was rejected by the Union Finance Ministry which was managing the affairs of the bank after it ran into trouble. Subsequently, the said amount was returned.
A Debt Recovery Tribunal decreed a total of Rs 1.85 crore along with interest in 2,000 in favour of the bank. A writ petition filed by the company was dismissed by the HC which directed the bank to go ahead with realising the amount. But, the company approached the court with an appeal against the single judge’s order.
The division bench said it was compelled to take suo motu cognisance because public money is involved, which can’t be allowed to be misused in the manner aforesaid.