ICICI Bank seeks to protect its exposure to Dunlop2 min read . Updated: 27 Mar 2012, 11:15 PM IST
ICICI Bank seeks to protect its exposure to Dunlop
Kolkata: ICICI Bank Ltd moved the Calcutta high court seeking to participate in the so-called wind-up proceedings launched against tyre maker Dunlop India Ltd by its unsecured creditors, attempting to protect its own exposure of ₹ 575 crore to the company. The court allowed the bank to join the proceedings.
The Ruia Group, promoted by accountant-turned-entrepreneur Pawan Kumar Ruia, acquired Dunlop in 2005 from the late Manohar Rajaram Chhabria’s Jumbo Group.
The court on Monday appointed a liquidator to take over Dunlop’s current assets and reclaim those “fraudulently" sold by the company after it came under the control of the Ruia Group.
In 2008, ICICI Bank loaned money to two Ruia companies—Shalini Properties and Developers Pvt. Ltd and SPR Resorts Ltd—against the mortgage of a 58.5-acre plot in Athipattu village near Chennai.
Dunlop sold this plot in 2007 to a subsidiary, Dunlop Properties Pvt. Ltd, which in turn mortgaged it a year later with ICICI Bank for credit facilities obtained by two Ruia Group companies.
Following Monday’s order, the mortgage is out of equity, according to lawyers, who did not want to be named. More creditors, who have loaned money against properties formerly owned by Dunlop, are likely to join the wind-up petitions being heard by the Calcutta high court.
Lawyers for ICICI Bank said in court on Tuesday that the judgement on transfer of Dunlop’s properties had put at risk the money the bank had lent to the Ruia companies. They claimed the bank wasn’t aware of the questionable transactions, and that it wanted to participate in the liquidation proceedings to secure its interests.
An ICICI Bank spokesperson didn’t respond to questions from Mint.
The property near Chennai, says Monday’s Calcutta high court order, was “stolen" from Dunlop, which received ₹ 80 crore as consideration from the purported sale. This, too, was paid in shares of Dunlop Properties, issued to the tyre maker at ₹ 999 each—or at a premium of ₹ 989 per share— says Monday’s Calcutta high court order.
Dunlop Properties in its balance sheet for fiscal 2011 valued the property at ₹ 614.46 crore.
“The company (Dunlop), it is obvious, sold one of its landed properties at a gross undervalue to an entity controlled by the same management," said Monday’s order, adding that “the worthless shares of Dunlop Properties" that Dunlop received were transferred to a Mauritius firm so that the questionable transaction wasn’t immediately evident.
“The company and those in management thereof had meticulously planned the entire scheme with the skill of a trained killer," said justice Sanjib Banerjee in his order.
Dunlop had no comment on Tuesday’s development. A spokesperson for Dunlop said on Monday that the company would appeal the order, while refusing to make any further comment.
The company on Tuesday moved the division bench of the Calcutta high court, according to the lawyers cited above.
A section of West Bengal government officers are of the view that justice Banerjee’s order has created “strong grounds" for the state and Dunlop’s creditors to initiate criminal proceedings against the Ruia Group.
“It is clear from the observations made by the judge that the intention of Dunlop’s management was to cheat minority shareholders, creditors and workers," said an official in the commerce and industries department, who did not want to be identified. “If the order is carried in appeal, the state and creditors have strong grounds to file criminal proceedings against the Ruia Group."