Stay on property sale of Diamond Bank scam accused lifted

The Gujarat High Court on Thursday lifted the stay order on the sale of properties of C R Patil, the prime accused in the Diamond Jubilee Co-operative Bank scam.

With this, the prospects of the bank recovering over Rs 50 crore, which Patil owes to it, have brightened. The Gujarat High Court had stayed a three-party memorandum of understanding (MoU) related to the sale of the properties of Patil.

Patil, who was arrested by the Surat city police in connection with the multi-crore rupee scam, was released on bail by the Gujarat High Court.

He had given an undertaking that he would repay the entire loan amount to the bank.

To repay the loan Patil had put up his various properties, including a six-lakh sq metre land at Sachin, 3,800 flats, a farmhouse, and the like for sale.

The Ahmedabad-based Shri Saumya Constructions had expressed willingness to purchase these properties, which led to the signing of the MoU.

The MoU was signed between Diamond Jubilee Bank, C R Patil and Shri Saumya Constructions in March earlier this year.

The memorandum of understanding was sent for the Reserve Bank of India's (RBI) approval.

The MoU, however, ran into rough weather as depositors of the Diamond Jubilee Bank challenged it in the high court.

The Diamond Jubilee Bank Bachao Samiti, which represents the bank's depositors, filed a writ petition in the high court, stating that the various terms and conditions of the MoU were unclear. The Samiti argued that the interests of thousands of depositors were not taken into consideration in the MoU.

In view of the depositors' petition, the high court had stayed proceedings on the MoU.

An application, seeking the lifting of the stay order, was filed in the high court by Patil, Diamond Bank and Shri Saumya Constructions. The application stated that the MoU was signed with the intention of recovering the dues of Diamond Jubilee Bank from Patil.

It also stated that the interests of depositors had been kept in mind in the MoU. The application further stated that in case Shri Saumya Constructions withdrew from the MoU, the sale of the properties would become difficult, which would only hurt the depositors.

The application was heard by justice D N Patel, who lifted the earlier stay order on the MoU, thus paving the way for the sale of Patil's properties.

Justice Patel observed that the earlier writ petition was filed by an unregistered association of depositors, which represents just 750 out of the approximately 85,000 depositors of the Diamond Jubilee Bank.

Diamond Jubilee Co-operative Bank went bust on August 29, 2002, mainly because the bank authorities gave out loans indiscriminately and without following proper norms to C R Patil and others. The RBI terminated the licence of the Diamond Jubilee Bank on June 19 and decided to liquidate it.

The Bharuch district registrar of co-operatives R M Asodia's appointment as Diamond Bank's liquidator has been made by the Gujarat Registrar (Co-operatives) B K Gupta.

Asodia will take charge as the bank's liquidator on Monday and look after the recovery and payment.