The Hon’ble Supreme Court has stayed the order of Hon’ble Bombay HC to dispose the assets of HDIL and distribute the same to PMC bank depositors. Before the Hon’ble HC, the plea of RBI was not presented and thus the Hon’ble Apex Court based on Audi Alteram Partem stayed the order of the Bombay HC and issued notice to RBI to send plea to all the parties in the case.
The Supreme Court on Friday stayed the order of Bombay High Court directing the sale of Housing Development and Infrastructure Limited (HDIL) to ensure the repayment of dues to the crisis-hit Punjab and Maharashtra Cooperative Bank (PMC). The Three judge bench of Chief Justice SA Bobde, Justice BR Gavai and Justice Surya Kant took note of the appeal filed by the Reserve Bank of India (RBI) against the order of the Bombay High Court.
The matter came into light after the Reserve Bank of India (RBI) last year discovered that PMC bank had allegedly created fictitious accounts to hide over Rs. 4355 crore of loans extended to HDIL. The RBI alleged that, PMC bank had masked over 44 problematic loan accounts. Including those of HDIL, this was done by tampering of the core banking system, and the accounts were accessible to only limited staff members. Charges were registered against the senior bank officials and HDIL promoters by the Mumbai Police’s Economic Offences Wing and the Enforcement Directorate.
The Bombay High Court was approached to ensure the payment of dues to PMC bank account holders. The Bombay High Court in its 15th January order appointed a three member committee headed by retired judge, Justice S Radhakrishnan. The committee was constituted for the speedy disposal and auction of HDIL assets, and also the distribution of such proceeds to crisis-hit PMC bank depositors on priority. The Bombay High Court to ensure proper cooperation with the committee had directed that Rakesh Wadhawan and Sarang Wadhawan, promoters of HDIL, be shifted from Arthur Road jail to their residence at Bandra, where they will be in custody of two police men.
The Supreme Court was approached earlier also by the Enforcement Directorate (ED), who moved to the Apex Court challenging the order passed by the Bombay High Court a day after the order was passed by the Court. In response to the appeal, the Supreme Court granted an interim stay on the order of the High Court on the limited aspect related to the release of the accused from the Arthur road jail to lodge them in their residence.
- SC stays the order passed by the Bombay HC as they didn’t hear RBI’s side.
- ED approached the SC for stay earlier, to which SC granted interim stay concerning release of the accused.
- SC has issued notice on RBI’s plea while staying the order passed by the Bombay High Court.
The Supreme Court’s order
The bench of Chief Justice SA Bobde, Justice BR Gavai and Justice Surya Kant stayed the sale of HDIL assets. The Apex Court issued notice to RBI’s plea to all the parties, including Sarosh Damania who approached the Bombay High Court for ensuring payments of PMC’s dues. The RBI approached the Supreme Court, challenging the Bombay High Court’s order, seeking a stay on the order directing the sale of the assets of HDIL for the repayment of PMC bank’s due, on the ground that the Bombay High Court passed its order without hearing the RBI.
In view of the above the Supreme Court on Friday (6.2.2020) stayed the Bombay High Court’s order and also issued notice to RBI’s plea to the other parties.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
1. Bar and Bench, https://www.barandbench.com/news/litigation/pmc-bank-crisis-supreme-court-stays-sale-of-hdil-assets-agrees-to-hear-rbis-plea (last visited 8th February 2020, 12:27 PM)
2. The Economic Times, https://economictimes.indiatimes.com/industry/banking/finance/banking/sc-stays-bombay-hc-order-directing-sale-of-hdil-assets-to-repay-dues-of-pmc-bank/articleshow/74003509.cms?from=mdr (last visited 8th February 2020, 12:27 PM)
3. The Hindu, https://www.thehindu.com/news/national/supreme-court-stays-bombay-hc-order-directing-sale-of-hdil-assets-to-repay-dues-of-pmc-bank/article30760669.ece (last visited 8th February 2020, 12:27 PM)