Taking serious note of a series of cases related to bank loan defaulters flying abroad without discharging their liabilities, the Madras High Court has directed a nationalised bank to take possession of the passport of a loan defaulter whose pharmaceutical firm owed over ₹ 755 crore to the financial institution.
Justice S. Vaidyanathan issued the direction while passing interim orders on a company application filed by Karnataka Antibiotics and Pharmaceuticals (KAPL), a central public sector enterprise, against Arvind Remedies, a company under liquidation, situated at SIDCO industrial estate Kakkalur in Tiruvallur district.
KAPL had sought a direction to Punjab National Bank and an Official Liquidator to hand over its raw materials, packaging materials and finished products that were lying on the premises of Arvind Remedies.
On going through the case papers, the judge found that KAPL had entered into an agreement with Arvind Remedies in 2016.
Approved drugs
As per the agreement, KAPL agreed to supply approved drugs in bulk along with packaging materials to Arvind Remedies, which had the obligation of turning them into finished products and supplying them to KAPL.
It was also claimed that the agreement was entered into without being aware of the poor financial situation of Arvind Remedies.
“When there is a communication dated November 17, 2016 from Punjab National Bank to KAPL as regards the pendency of a recovery suit to the tune of ₹ 755.19 crore against Arvind Remedies, KAPL’s contention that it was not aware of the SARFAESI proceedings against Arvind Remedies is unbelievable,” the judge said.
Further pointing out that the raw materials and other products of KAPL were worth only around ₹ 6 lakh, the judge said: “It is no doubt true that in the present application, two government organisations (KAPL and PNB) are fighting each other for a paltry sum, while the white-collared criminals are trying to escape from the clutches of law.” The judge directed B. Arvind Shah, Managing Director of the firm under liquidation, to surrender his passport to the jurisdictional police within a week and directed the police to hand over the passport to the bank under due acknowledgement. It was also made clear that he should not leave the country without the court’s permission.
In so far as KAPL’s plea was concerned, the judge directed the Drug Controller of Tamil Nadu to take stock of the goods and submit a report by March 15.
