₹2,800 crore loan default: B.R. Shetty’s plea rejected
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It is time legislation makers and RBI re-visit lending pointers to make sure public cash is effectively secured, says Court
In a setback to B.R Shetty, NRI entrepreneur and promoter of UAE-based NMC Healthcare, the High Court of Karnataka has rejected his plea in opposition to the motion of the Bureau of Immigration restraining him from leaving India based mostly on the Lookout Circulars (LOCs) issued by two public sector banks to whom his firms owe round ₹2,800 crore.
The immigration authorities on November 14, 2020, denied him permission to fly to Abu Dhabi from Bengaluru airport based mostly on the 2 LOCs issued by the Bank of Baroda (BOB) and the Punjab National Bank (PNB) in May and July respectively in relation to default of loans granted to firms promoted by him.
Justice P.S. Dinesh Kumar dismissed the petitions filed by Dr. Shetty whereas holding that motion of the banks and immigration authorities can’t be interfered with because the petitioner, as per the legislation, has a possibility to method the banks, which have issued LOCs in opposition to him, and clarify them that the LOCs have been issued wrongly.
Approach banks
“Unless Dr. Shetty exhausts the remedy of approaching BOB and PNB and explains to them how the LOCs have been wrongly issued, and the banks pass any further orders, his prayer to permit to travel to Abu Dhabi cannot be considered,” the court docket stated.
On his declare that he was solely the guarantor for the loans and that he had demitted the posts managements of the businesses based mostly in UAE and the banks have additionally initiated course of in UAE, the HC stated the petition was liable to be dismissed on the brink due to the admission by the petitioner that he was the guarantor as “a guarantor is equally liable to repay the debt.” Moreover, the petitioner himself was the promoter of those firms, it famous.
The firms promoted by Dr. Shetty owe ₹2,000 crore and ₹800 crore to BOB and PNB respectively and he’s the guarantor for the borrowed sums. He had come to India in February final 12 months and wished to return to UAE in November.
Re-visit lending pointers
The HC additionally noticed that, “it is time, the law makers and the Reserve Bank of India re-visit the lending guidelines and the procedures and take necessary remedial measures to ensure that public money is well secured before disbursement.”
Justice Kumar made the statement whereas declaring that the banks, on being requested about on what safety they’d enormous sums as loan to Dr. Shetty’s firms, had not solely said firms have been listed in London Stock Exchange and the share worth had proven that the businesses had excessive internet value.”
Noticing that tangible property, if any, mortgaged in favour of the banks by Dr. Shetty’s firms and their valuation usually are not forthcoming, the court docket noticed: “If Public Sector Banks are permitting such a large exposure without adequate securities, it is a matter of great concern and it shall have serious adverse impact on the economy of this country.”
Pointing out that the facility, vested since 2017, with the chairperson of the banks to concern LOCs may be exercised solely in distinctive circumstances in opposition to fraudsters, individuals taking loans and wilfully defaulting, cash launderers, and many others., it was contended on his behalf that he doesn’t fall beneath any such class.
It was contended on Dr. Shetty’s behalf that loans have been borrowed in UAE and never in India, and default in compensation occurred throughout 2019-20 after he stepped down from the administration of the businesses in 2017.
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