Madras HC raps banks for granting crores to firms without adequate security

The Madras High Court slammed public sector banks Monday for granting crores of rupees as loans without sufficient security to several firms when people are begging for educational and farm loans The courts stinging observations came when it was hearing a plea filed by the State Bank of India in the Rs 820 crore debt recovery proceedings against Kanishk Gold Private Limited seeking quashing of attachment proceedings by the Enforcement Directorate ED against the firmWhen the petition by the SBIs Stressed Assets Management branch came up Justice R Mahadevan posed a host of questions to the counsel for the bank The court said it will issue necessary orders to arrest all the officials and persons involved in the scam It is public money The people are begging for education and farm loans after offering securityDo not try to safeguard the officials of the bank in this case and nobody can escape under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act 2002 also known as SARFAESI Act We will set an example by passing order in this case to whole country the court said The judge asked whether bank officers verified documents before sanctioning loan to the firmWhat is the total amount of loan sanctioned What is the worth of properties offered for security it asked The court directed counsel for the ED who filed a counter affidavit to collect details about the involvement of officials investigate and file a report in detail The matter was posted for further hearing to September 17 The counsel for the SBI submitted that there was dereliction of duty on behalf of the officers who investigated the case In its counter the ED said As per the forensic audit there are misrepresentationfalsification of records diversion of funds and disposal of the stocks by the companyThe total loss caused to the banks due to the above fraud works out to the tune of Rs 82415 crore outstanding as on December 31 2017 plus interest The security available with banks to cover the said loss is to the tune of Rs 15865 crore only being realisable value of the immovable properties it said The matter relates to the loan granted to the firm by the public sector banks including the SBI to the tune of Rs 700 crore which accumulated to Rs 820 crore with interest up to March 15 2018 The banks took action under the SARFAESI Act and took symbolic possession of nine propertiesThe SBI and its consortium banks also lodged a complaint before the CBI it was submitted Bhupesh Kumar Jain one of the directors of the firm was arrested by the Directorate General of Goods and Service Tax Intelligence for alleged evasion of duty The ED director had passed an order freezing the properties during search and seizure under the Prevention of Money Laundering Act PMLA The agency had also passed a provisional attachment order attaching all secured properties under the PMLAThe SBI moved the court submitting that by effecting the provisional attachment order the ED had scuttled the frantic efforts of the banks from realising public money The ED counter said it is indicated that the bank officials failed to exercise their due diligence before sanctioning and extending the bank loans to the borrowers named in the FIR registered by CBI BS amp FC BangaloreHence it is not only case of NPA but a case of criminal conspiracy cheating fraudulence by the said borrowers along with officials of the consortium of banks herein and others and therefore the loan proceeds are nothing but proceeds of crime involved in money laundering Instead of availing statutory remedy available under section 81 of the PMLA the petitioners filed the plea which is liable to be dismissed the counter saidCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updatesThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever