Telangana high court blow to Transstroy, banks’ heat on | Sidnaz Blog

Sidnaz Blog


HYDERABAD: The Telangana high court on Friday withdrew a protection order issued earlier in favour of directors of Transstroy India Ltd company founded by TDP’s former MP Rayapati Sambasiva Rao and said lender banks were free to proceed against the personal guarantors-cum-directors of the company which allegedly duped banks to the tune of Rs 9,000 crore.
The court made it clear that promoter-directors of companies, who stand as personal guarantors for thousands of crores of loans generated, cannot escape the punitive consequences that flow from the aggrieved lenders.
A bench of Chief Justice Hima Kohli and Justice B Vijaysen Reddy gave this interim direction while hearing an application filed by Canara Bank.
Appearing for the bank, senior counsel Deepak Bhattacharjee informed the court that Transstroy came to court challenging the RBI’s circular asking all banks to declare suspicious bank accounts as fraud accounts to prevent other banks from being duped by the same defaulters.
A division bench had earlier stayed the circular on the ground that it would be unfair to unilaterally declare loan accounts as fraud accounts without hearing the borrowers. “Taking advantage of this protection, Transstroy is preventing the proceedings against it before the National Company Law Tribunal and Debt Recovery Tribunal, etc. The Supreme Court recently gave a ruling that personal guarantors cannot escape responsibilty in such matters,” Bhattacharjee said.
Agreeing with Canara Bank’s argument that personal guarantors should not be allowed to make use of the interim protection given to the companies, the bench recalled its earlier order and gave liberty to the banks to proceed against the personal guarantors-cum-directors.
The petition in Transstroy case was filed by Cherukuri Sridhar, chairman and managing director of Transstroy, which is currently under liquidation. The bench, it can be recalled, had earlier granted similar freedom to the CBI and the Enforcement Directorate to continue their probe into the loan fraud and diversion of money, etc.
The bench also heard petitions from Sabbineni Surendra of Coastal Projects, whose borrowings have been categorised as fraud account, after his firm evaded repayment of Rs 5,000 crore and Hima Bindu of VMC Projects for defaulting on Rs 1,700 crore loans.
It also heard disgruntled YSRC MP Raghu Rama Krishna Raju’s Ind-Barath Thermal Power Ltd company which challenged the decision of the banks to declare its Rs 826 crore loan as a fraud account.
All these cases were adjourned to September 24.


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