Hyderabad: To alleviate MBS Jewelers Private Ltd, the Telangana High Court issued a temporary suspension order for demonstration notice issued by the Indian Overseas Bank (IOB) to declare the company’s loan account fraud.
The bank filed a lawsuit on the grounds that the company had mortgaged a property in Hafeezpet, a subsidiary of its subsidiary, involving a Supreme Court hearing.
The bank’s allegation was that the borrower or defaulting company misunderstood the bank’s guaranteed facilities and CC facilities. MMTC invoked a guarantee worth Rs 700 crore for the 2011-12 year period.
Hafeezpet, Hyderabad, has approximately 48 acres of urban land property, mortgaged by Keerti Anurag Investments Pvt. Limited, controversial. The borrower suppressed the pending SLP in the Supreme Court and induced the bank to separate with huge public funds without revealing the mortgage.
MBS Jewellers had available cash credit (CC) limits, letter of guarantee (LG) and demand loans in gold with interchangeability of CC and LG limits from the IOB in 2008. The company defaulted, and its loan account was classified as non-performing asset in 2013. Proceedings under the Sarfaesi Act and the RDDBFI Act were initiated and the issue is pending before the Debt Recovery Tribunal.
The bank allocated the company’s debt to Thor Asset Reconstruction.
Senior legal counsel L. Ravichander and Pogulakonda Pratap, who represents MBS jewelers, said the notice had been issued seven years and 10 months later to review fraud statements on loan accounts.
P. Pratap argued that the Supreme Court had said that the rules of “Audi Alteram Partem (heard the other side)” must be read into the main instructions on fraud. However, the bank issued a notice without hearing the client.
Justice Eutherpalli Nanda issued a temporary moratorium on the notice displayed by the bank, considering the Supreme Court’s guidance.
