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SASF moves against guarantor to recover debt instead of selling mortgaged property: Gauhati HC wants an explanation

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The Gauhati High Court recently asked the Stressed Assets Stabilization Fund (SASF) to explain why proceeding to recover dues have been started against a corporate guarantor, when the mortgaged property in a case has been available for sale since 2005.

Petitioner Raj Kumar Bajaj has said in his petition that he owes Rs 2.15 crore to the Industrial Development Bank of India (IDBI), whose debt has been now transferred to the Stressed Assets Stabilization Fund (SASF). The SASF has to recover this debt from the petitioner on behalf of IDBI, and the Rs 2.15 crore is an amount settled through negotiation in 2005. Of this, said the petitioner, he has already paid Rs 92.24 lakh, leaving a balance of Rs 1.23 crore due.

Bajaj also said that as per the negotiated settlement, the mortgaged immovable property of the petitioner – 790 bighas of land – is to be sold to clear the remaining amount. The petitioner has claimed that instead of selling the said mortgaged land which could cover the debt, the SASF is proceeding to recover the debt from the corporate guarantor, the National Plywood Industries Limited (NPIL).

M.L. Gope, counsel for the petitioner, submitted that the SASF ought to have sold the said mortgaged property for recovery of the debt, rather than proceed against the corporate guarantor, that too without involving the petitioner.

It is further submitted that whatever amount the SASF is seeking to recover from the corporate guarantor has to be ultimately paid by the petitioner, and the petitioner is also questioning the correctness of the amount which the SASF is seeking to recover from the corporate guarantor.

The mortgaged land cannot be sold by the petitioner without the consent of the SASF, and the SASF is not giving this consent, the counsel added.

The Petitioner also contends that had the land been sold in 2005 or soon thereafter, the cumulative debt would have been much less as unnecessary piling up of interest could have been avoided. Moreover, the SASF is now proceeding to recover an enhanced amount from the NPIL in the proceeding filed by the SASF before the National Company Law Tribunal, Guwahati bench in which proceeding the petitioner, though is the principal debtor, has not been impleaded as a party.

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Thereafter, Justice N. Kotiswar Singh asked for an explanation from the SASF. The court also “directed that no coercive action be initiated against the petitioner and the respondent No.4 (NPIL) relating to the said debt.”

The Matter is listed for June 23.

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