SBI approaches Madras HC, seeks quashing ED proceedings attaching property of Kanishk Gold

Last Updated: Thu, Aug 30, 2018 15:20 hrs

Bhupesh Jain of Kanishk Gold in a file-photo.

Chennai: State Bank of India (SBI) has approached a bench of the Madras High Court in a Rs 820 crore debt recovery proceeding against Kanishk Gold Private Limited.

The bank seeks quashing of proceedings filed by a team of Enforcement Directorate in attaching the firm's property.

In its plea, the SBI sought a direction for quashing the proceedings under the PMLA act "as it is violative of rule of law, more particularly the provisions of Recovery of debts and Insolvency Act as well as SARFAESI Act."

This is what the bank had alleged.

Justice R Mahadevan, before whom the SBI petition came up on Wednesday, has issued a notice to an ED counsel and the matter is expected to be heard soon.

Kanishk Gold Private Limited, according to official estimates released by the bank owes Rs 819.56 crores (as on 15th March) to a consortium of banks led by State Bank of India.

SBI and other banks had approached a Debt Recovery Tribunal-II to recover outstanding loan said a counsel, as quoted by PTI DRT-II had previously passed an interim order directing the promoter-directors of the company not to leave the country pending disposal of the SBI’s application.

Kanishk Gold had deposited original title deeds pertaining to the properties to create equitable mortgage in favour of the SBI and its consortium banks.

But, since loan accounts had become non-performing assets, SBI and consortium banks jointly issued a demand notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as SARFAESI Act) to the company's directors.

The bank following issuance of SARFAESI, took symbolic possession of Kanishk Gold’s nine properties.

A formal complaint with the CBI was also submitted. Following this, Bhupesh Kumar Jain, the firm’s directors was arrested by Directorate General of Goods and Service Tax Intelligence over alleged evasion of duty.

Meanwhile, the Director of Enforcement Directorate had passed an order freezing the properties during search and seizure under the Prevention of Money Laundering Act (PMLA).

The ED had also passed a provisional attachment order attaching all secured properties under the PMLA.

It further ordered that the secured properties shall not be transferred, disposed, removed or otherwise dealt with unless or until specifically permitted to do so by them.

SBI submitted that the ED’s provisional attachment order had scuttled the bank’s frantic efforts in realizing public money.

With Agency Inputs

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