The State Bank of India (SBI) has moved the Supreme Court seeking recovery of Rs 230-crore dues from four mining companies, falling under Category ?C? mines, whose licences stand cancelled after the April 18 order.
SBI being a secured creditor is entitled to a preferential right of recovery from the sale proceeds of entire hypothecated iron ore stocks sold by MTSC through e-auction, the bank?s counsel said.
A special green bench headed Justice AK Patnaik has sought reply from the Karnataka government and others on SBI?s application seeking ?protection of public money?.
The bank, through counsel Sanjay Kapur, sought clarification/modification of Paragraph 50(8) of the April 18 judgment whereby the leases in respect of ?C? category mines stood cancelled and the proceeds of the sales of iron ore made through the monitoring committee stood forfeited to the state towards an SPV.
SBI, which claims to have acted bonafidely during grant of loans to the four firms VSL Mining Company, VS Lad & Sons, VSL Steels and Aina Minerals Trading & Logistics, said that the borrowers had valid mining lease and clearances at then and there was nothing to indicate that they were engaged in mining beyond their designated areas. However, it stated that no loan was sanctioned after the ban was imposed in July 2011.
According to the bank, its total dues to these four borrowers is around Rs 213 crore, while the proceeds collected from selling their stocks are Rs 252 crore, thus Rs 39 crore could still be appropriated towards illegal mining by them for reclamation and rehabilitation.
Stating that SBI?s rights have been adversely affected, Kapur said ?Except for the value of the stocks of iron ore, which have been directed to be forfeited, the bank is not having sufficient collateral security available, to recover/satisfy its dues. The indebtedness of the above companies are not capable of being satisfied by enforcing the collateral security which is too meager.?
Kapur added that SBI is under severe stress due to the accounts under mining sector slipping to the non-performing assets (NPA) category as the borrowers had not serviced the interest or repaid the installments, thus impacting the bank?s loan portfolio.
?The recycling of funds in the banking channel leads to economic prosperity. If there is systemic default in repayment, the cycle would snap leading to collapse of the system. The increasing NPA levels affects the bank?s image and rating by domestic/ international rating agencies, which in turn would affect the sovereign rating of the country as a whole,? SBI said.
