NEW DELHI: The Supreme Court on Friday ordered the lender banks — Indian Bank, Dena Bank, State Bank of Patiala and Bank of Rajasthan — to pay Rs. 8 crore to the ailing Southern Petrochemicals Industries Corporation (SPIC) for running its plant.

A bench headed by Chief Justice K. G. Balakrishnan vacated its earlier interim stay order on the Madras High Court judgment that upheld the Debt Recovery Appellate Tribunal’s (DRT) interim order asking banks to release around Rs. 8 crore a month to the ailing SPIC to run its plant. It also directed the tribunal to decide the matter expeditiously within two months. The tribunal on March 5, 2008, had asked the banks to release Rs. 8 crore and Rs. 5 crore a month to SPIC for operational expenses and restarting the plant, respectively.

Opposing the release of further funds, senior counsel Soli Sorabjee and Mukul Rohtagi, appearing for the banks, said they had an exposure of over Rs. 300 crore to the company, hoping that they would be able to recover their dues after SPIC turns around. However, SPIC senior counsel Harish Salve and K. K. Mani said the money to be released from the Trust and Retention Account (TRA) Agreement was SPIC’s money and the banks were just the custodian of the same. According to the restructuring package, SPIC was required to give Rs. 565 crore during 2003-06 by selling its divisions and the promoters were to pledge their shareholding in SPIC to the members of the consortium banks. The company was also supposed to pledge its investment in Indian Jordan Chemical, Mauritius-based SPIC Fertiliser and Chemicals Ltd, Tamil Nadu Petroproducts Ltd and Maiveli Petrochemicals Ltd, the petition said. Aggrieved by SPIC’s failure to adhere to the repayment schedule and the terms of the CDR package, which were made part of the Trust and Retention Account Agreement, various banks, including Punjab & Sind Bank and Tamil Nadu Mercantile Bank, had moved DRT seeking recovery of their dues. The DRT had then directed Indian Bank to open fresh Letters of Credit (LC) to the extent of subsidy amounts given in TRA or those used by the banks for settling the devolved LCs in June 2007. It dismissed in January last year SPIC’s plea to utilise over Rs. 196 crore in its TRA account towards settling LC commitment. — PTI