DRT orders Rs211 cr recovery from Uniworth

Nagpur: In what is said to be the biggest case in the region, Debts Recovery Tribunal (DRT) has passed an order for recovery of Rs211 crore bank dues from Uniworth Textiles Limited. The company has its unit at Butibori industrial estate of MIDC. The original loan of Rs41.5 crore granted cumulatively by IFCI Limited and ICICI Limited had swelled to Rs211 crore as the default continued for two decades. The order comes after recovery process began seven years ago.
The recovery application was filed by Asset Reconstruction Company (India) Limited (ARCIL), which had taken over the original loans from IFCI and ICICI. Even as the symbolic possession of company’s assets was taken by ARCIL in 2011, it could not take physical possession. The matter was put in abeyance at the district magistrate’s level, from where an order is required to take the physical possession. Later, ARCIL moved the high court, where the matter was pending. Side by side, an application for recovery was filed in DRT in 2014, said SN Kumar, counsel for ARCIL, assisted by Ashish Aswani. ARCIL had taken over the loans between 2004 and 2007.

DRT presiding officer Chikkam Vijay Mohan also made a strong observation against the defendants for not responding to the tribunal in time during the proceedings. It was observed in the ruling that courts should act against such evasive tactics meant at delaying the legal process.

The order also calls for individual recovery against Ajay Lohia, company’s promoter, who was a guarantor for part of the loan amount. Lohia’s share comes to Rs101 crore, along with Rs165 crore of another company — Uniworth Limited — which stood as corporate guarantor for Uniworth Textiles.

Lohia is related to OP Lohia, the promoter of textile major Indo Rama Synthetics Limits (IRSL), which also has a plant at Butibori. Uniworth is also engaged in the textile sector. ARCIL mentioned in its application that the company as well as the guarantors did not pay outstanding dues despite repeated reminders due to which the application was filed with the DRT.

The tribunal issued an ex-parte judgment against the defendants. Lohia, defendant no. 2 in the case, was not present and the company Uniworth Textiles did not file a written statement.

Citing a Supreme Court ruling in Dyandeo Sajabi Naik vs Pradna Prakash Khadekar case, the DRT presiding officer said, “A strong message must be conveyed that courts of justice will not be allowed to be disrupted by litigative strategies designed to profit from delays. Unless remedial action is taken by all the courts, our society will breed a legal culture based on evasion.”

In 1996, Uniworth had secured a loan of Rs20 crore from IFCI. Later, it was lent two loans worth Rs10 crore and Rs5 crore by ICICI too.

The loans from ICICI were converted into foreign exchange debt worth $3 million in 1998. Later, the loan was restructured in March 2002. Under the arrangement, forex loan worth $1.8 million was to be paid in seven quarterly instalments. However, there was a default again and a fresh restructuring plan was approved. After that another Rs6.5 crore were lent to Uniworth Textiles by ICICI.

IN A NUTSHELL

Uniworth Textiles’ original loans stand at Rs41.5 crore

IFCI Limited gave Rs20 crore loan, ICICI gave loans of Rs10 crore, Rs5 crore, and Rs6.5 crore

Part of ICICI’s debt was converted into foreign exchange loan

Forex loan was defaulted, leading to restructuring and another default

Loans were taken over by ARCIL between 2004 and 2007

ARCIL took symbolic possession of assets in 2011

Recovery was delayed as matter was held up at district magistrate level

It remained pending at high court too

ARCIL later approached DRT