The District Cooperative Bank is moving to take over the 45-cent land which houses the factory since it defaulted on loan repayment.
There seem to be no end to the controversies surrounding the Commonwealth Trust (Comtrust) Textile Factory.
Even as its employees are waiting for the President’s assent to a Bill for its takeover by the State government, the 45 cents of land on its premises, which is now owned by the Kozhikode District Cooperative Travel and Tourism Development Society, has got into a fresh tangle.
The District Cooperative Bank has recently moved to take over this land after the cooperative society failed to repay the loan it availed itself of to buy the land in 2008.
The land holds the plant to recycle textile dyes, which closed down in 2009.
The Comtrust management had sold the land during the tenure of the Left government to the Kozhikode District Cooperative Travel and Tourism Development Society apparently to tide over the crisis due to provident fund payments.
The loan amount of Rs.4.75 crore has now accumulated to Rs.7.45 crore. The society had paid close to Rs.1 crore as interest.
The recovery proceedings are according to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SRFAESIA) of 2002. Just before the start of the attachment proceedings, the society offered to sell the land to the bank at a rate lesser than the market rate. This was ignored, the office-bearers of the society told The Hindu.
“When the government floated the idea to take over the factory, we offered to surrender the land, as it is for the cause of the struggling employees. But there was no response from their side even after we sent them a reminder. Two months ago, we went to the High Court and were given permission to sell the land. The bank’s attachment proceedings started at this point. We offered to sell the land to them at a lesser rate. But they seem to be hell bent on attaching and auctioning it,” says M. Bhaskaran, CPI (M) leader and president of the society.
The society has now obtained a stay order from the HC and has time till January 31 to repay the loan.
There is also a UDF-LDF twist to the tale. The bank, according to Mr. Bhaskaran, took up attachment proceedings of the land after its new governing body under the UDF took charge.
“They have not taken action against those who availed themselves of similar loans years before,” he says.
‘No political motive’
Manayath Chandran, president of the cooperative bank, however, denies any political motive to the attachment proceedings.
“The Comtrust land’s loan is currently the biggest Non Performing Asset (NPA) of the bank. We got the RBI’s licence in 2012 as per the Banking Regulation Act and to maintain it, we need to keep the NPAs under check. So we served them a 60 days notice in May. After that period, we gave a seven-days notice. But now they have time till January next year to repay the loan as per the HC stay order,” says Mr. Chandran.
When asked about the society’s offer to sell the land to the bank, he says even at the market rate it will not fetch them the outstanding loan amount.
Also, there could be legal tangles in buying a land that was supposed to be taken over by the State government.
The cooperative society has also come under accusations as being a ‘CPI (M) controlled society’. Taking offence to this, Mr. Bhaskaran says, “Except two members of the party, everyone else in the board of the society comes from different backgrounds. Does anyone brand societies with members from other parties with that party name?”
Also, the society took over the land to construct an office building and not for the construction of a ‘five-star hospital’ as is the popular opinion, he adds.
Workers in trouble
Caught between the bank and the society are the 100-odd workers of the Comtrust factory, who have been on protests ever since the plant closed down.
“We suspect that the delay in the President’s assent for the government takeover the factory has something to do with all these land deals. Last week, some people had come to clean up the plot but we opposed it,” says P. Sivaprakash, Joint Convenor of the employees’ action committee.