The Hindu : Tamil Nadu News : Court orders sale of defaulting finance firm's property

Online edition of India's National Newspaper
Thursday, Dec 23, 2004

Tamil Nadu

Tamil Nadu

Court orders sale of defaulting finance firm's property

By Our Staff Reporter

CHENNAI, DEC. 22. A financial establishment, which defaulted on repayment of Rs. 21 crores and also failed to implement a revival scheme drawn by the Madras High Court, was today ordered sold and the proceeds distributed proportionately to over 9, 100 depositors.

A Division Bench comprising Justice P. Sathasivam and Justice A.R. Ramalingam passed the order after dismissing a petition from the Chennai-based Bharathi Gems and Jewels proprietor, S. Thuraisingam, seeking to postpone payment of the first instalment of deposit as stipulated by an August 2003 order.

Describing it as a "temporary arrangement," the judges in their earlier order permitted Mr. Thuraisingam to re-commence business but said that it would not absolve him of any criminal liability or prosecution; that the competent authority would return four pieces of attached property; that these property would not be disposed of in any manner; and that the deposit amounts should be paid in three instalments in two years, with the first instalment of 10 per cent payable in 45-60 days.

Total failure

However, despite the lapse of 15 months, Mr. Thuraisingam could not re-commence business as was mutually agreed upon by him and the depositors' association. Pointing out that even power supply to the building was not restored, as he did not pay the accumulated electricity charges, the judges said the proprietor "totally failed in his commitment."

Also, "the parties who earlier agreed to supply jewels at wholesale rate have not done so. Nothing has happened so far, except the opening of a joint account as per the earlier order. Nothing was deposited in the account for want of business."

Since the depositors felt that the "scheme was an utter failure," and that there was no chance of any improvement in the situation, the Bench said, "he has no locus standi to have the property with him."

Rejecting Mr. Thuraisingam's plea that if time was extended there would be a likelihood of revival of the business, the judges said: "This court has no other option except rejecting the request." No purpose would be served by granting extension of time. The depositors had also informed the court that they were ready to face the consequences of bringing all property of the defaulter to a public auction, and that they were willing to receive the amount from the auction.

"The proprietor of Bharathi Gems and Jewels has not only cheated the depositors in committing default but also misled this court by giving a false assurance that it will revive its business by granting time."

The judges directed him to hand over the property, attached earlier, to the competent authority and the Commissioner of Land Administration within two weeks. In case of non-compliance, the officials could requisition police help to take possession of the property. The competent authority was directed to make a sincere endeavour by bringing the property for sale through a public auction after issuing advertisements in leading Tamil and English dailies.

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