Tribunal stays ICICI notice to Mardia

Ad-interim ex-parte injunction to be in force till Mardia's next hearing on July 1.

The recovery of distressed assets by banks and financial institutions today took a new twist when the Debt Recovery Tribunal, Ahmedabad, stayed ICICI Bank's notice of July 16, 2002, to Mardia Chemicals under the Securitisation Act.

The ad-interim ex-parte injunction will be in force till July 1, when Mardia Chemicals' appeal next comes up for a hearing.

Today's order comes after the Supreme Court judgment of April 8, which allowed lenders to approach the DRT freely by striking down a provision of the Securitisation Act that required a borrower to deposit 75 per cent of the lender's claim before he could file an appeal with the DRT.

It was expected that the judgment would open the floodgates for litigation against notices sent by banks and financial institutions.

Following the Supreme Court order, Mardia Chemicals had filed its appeal with the DRT on May 20.

Apart from restraining ICICI Bank from acting under the July 2002 notice till its appeal is disposed of, Mardia Chemicals had also asked the DRT to direct ICICI Bank to preserve and protect the company's assets under its possession. The DRT has granted relief only on the first appeal.

Senior ICICI Bank executives refused to comment on the development. But institutional sources said the DRT order would have no impact as the Bombay High Court appointed receiver had already started taking possession of some of the factories and inventory at Mardia Nagar (Surendranagar, Gujarat), institutional sources said.

The receiver, who is in the process of taking possession of plants, building and machinery of Mardia Chemicals, is expected to allow its management to continue running the company.

The sources said even if the factory and property are sold the lender can recover only the principal amount and not the unpaid interest.

"There is no conflict between the DRT decision and the Mumbai High Court appointment of receiver as they are pari passu," said a source with a legal firm.

Refuting ICICI Bank's claim, Mardia Chemicals chairman Rasik Lal Mardia said that the Supreme Court judgement came after the Bombay High Court order.

"Under the Act, no other court is empowered to dispose of such matters," he said.

Mardia added that at the next hearing, his counter-claim of Rs 5,600 crore against ICICI Bank will now be heard by the DRT along with the claim of Rs 1,400 crore made by the bank on his company.