Tribunal issues notices to Deccan on Canara Bank petition

Last Updated: Mon, Dec 24, 2012 19:41 hrs

The Debts Recovery Tribunal (DRT) of Hyderabad today issued notices to Deccan Chronicle Holdings Ltd (DCHL) for defaulting on payment of Rs 347-crore loan to Canara Bank, the lead banker of the Hyderabad-based media company.

The tribunal has also issued injunction orders restraining the media house from creating any third party interest on the properties that had already been mortgaged against the loan with the bank. Canara Bank's local corporate branch, in a petition filed before the tribunal, stated the DCHL management had not only failed to repay the loans, but also fraudulently re-mortgaged the properties to other banks.

After hearing the contentions of the petitioner, DRT has delivered two ex-party orders, first asking the DCHL management why it should not be directed to furnish sufficient security towards the original application claim. Failing to show cause, the scheduled property (property that had been mortgaged with Canara Bank) shall be attached, the tribunal order said.

In a second order, the tribunal restrained the management by way of injunction from alienating or encumbering or creating a third party interest over all the scheduled properties. The tribunal has posted the case for further hearing on January 21, 2013, according to the petitioner's counsel.

Canara Bank is the latest one to initiate legal proceedings against the debt-ridden DCHL which has already been facing similar loan-default or check bounce cases, including a winding-up petition filed by a host of lenders, including ICICI Bank, IFCI and Yes Bank.

Incidentally, Canara Bank has also been conducting a forensic audit of the accounts of DCHL on behalf of the lenders’ consortium after the company started defaulting on loan payments.

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