COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

Delhi HC notice to RBI on Daewoo Finance plea

The Delhi high court on Friday issued notices to the Reserve Bank of India and the official liquidator on a petition filed by Daewoo Finance Ltd challenging the order of a single judge. A vacation bench had imposed restrictions in the day-to-day functioning of the company.

Daewoo Finance Ltd is one of the 40 companies to which the CRB Capital Market Ltd (CRBCML) is alleged to have siphoned off Rs 12 billion.

A division bench consisting of Justice Arun Kumar and Justice Dalveer Bhandari, after hearing the arguments, asked the parties to file their replies on or before July 21, when the court will hear the case next.

Counsel for Daewoo K T S Tulsi argued that the company court has no jurisdiction in freezing the account of any third company which cannot be said to be part of the company facing winding up.

A single-judge vacation bench of Justice S N Kapoor had imposed several restrictions on the functioning of the company. The court also ordered that the two CRB directors to the Daewoo Finance company board -- C R Bhansali and his wife Manju Bhansali -- should be substituted by A C Tiwari, retired deputy auditor general of India, and Meera Saxena, retired controller general of accounts.

The company had filed an application during the vacation for unfreezing its bank accounts and lifting of ban on the right of sale and purchase of its properties which was ordered by the high court on June 13.

Justice Kapoor had restricted CRBCML and 40 associate companies from making any deal of their immovable properties and had asked all nationalised banks and other financial institutions to freeze all their accounts.

The court had laid down five conditions while lifting of the freeze on the Korean Daewoo company:-
-- that neither any payment excepting petty and routine expenditure shall be made by the company, nor any liability by raising loan from any person shall be incurred without the prior approval of the board of directors;
-- that the company shall not dispose off its immovable properties and shall not take or transfer any amount outside the country without the permission of the court;
-- that the company shall hold an urgent meeting of either the shareholders or the board, as the case may be deemed necessary and desirable, to pass necessary resolutions to give effect to this order and in respect of the appointment of the two former bureaucrats as directors;
-- that the company shall also file security of immovable properties to the extent of Rs 50 million and an undertaking that they will not dispose off immovable properties of the company or otherwise part with possession without prior approval of the court; and,
-- that the board of company shall also ensure that a reserve sum of Rs 26 million is created during the next three months to ensure payment of this money to the official liquidator (OL).

The court said that since Daewoo counsel Tulsi had offered the nomination of two representatives of the OL to the board, the court was nominating Tiwari and Saxena as the directors.

The court ruled that the order was being passed to ensure that the interests of the investors of CRB Capital is protected without jeopardising the working of the Daewoo company.

In case of any difficulty, Justice Kapoor ordered that the present Daewoo management, Reserve Bank of India, OL, and Tiwari and Saxena may hold a meeting and may devise ways and means to implement this order and they may also seek and suggest modifications in the best interest of all concerned.

The court said that so long these conditions are not fulfilled, the Daewoo Finance company shall remain restrained from disposing of their immovable property and its all existing bank accounts, which are being opened, shall remain frozen to the extent of Rs 40.4 million.

UNI