Quick fix solution to recover bank debt

Will the ministry of corporate affairs consider invoking the provisions of Section 396 of the Companies Act, 1956 to make recoveries for bank loan defaults?

A new solution for recovering outstanding debt owed to public sector banks may have been discovered which may obviate the need for a recapitalisation plan of Rs 2 lakh crore announced by the government in October-November last year. It is well known that the lifestyles of many defaulter promoters hasn’t gone down proportionately to the size of their defaults, having either gold plated their capital expenditures already or diverted their loans elsewhere beyond their intended purpose. These “wilful defaulters” might well have met their match.

In a recent judgment involving the NSEL exchange payment defaults, the Bombay High Court has sanctioned