Who is responsible for siphoning off money, asks court | mumbai | Hindustan Times
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Who is responsible for siphoning off money, asks court

Hearing a public interest litigation (PIL) filed by Sunderbaug Co-operative Credit Society, the Bombay high court on Monday asked the state government if it has acted against those responsible for converting co-operative sugar factories into sick units.

mumbai Updated: Apr 19, 2011 02:25 IST
HT Correspondent

Hearing a public interest litigation (PIL) filed by Sunderbaug Co-operative Credit Society, the Bombay high court on Monday asked the state government if it has acted against those responsible for converting co-operative sugar factories into sick units.

Under the state government’s unconditional guarantee, the consortium of Maharashtra State Co-operative (MSC) Bank and the Mumbai District Central Co-operative (MDCC) Bank gave huge amounts as loans to several sugar factories, mostly run by political leaders or their relatives, in 1994. Later, the sugar commissioner stayed the recovery proceedings initiated by MSC Bank against some of the defaulting sugar factories. Consequently, Sunderbaug Co-operative Credit Society moved the high court in 2007.

“Have you fixed the responsibility for siphoning off the money? Have you taken any action against the directors who siphoned off the money?” asked the division bench comprising chief justice Mohit Shah and justice DG Karnik on Monday.

Government pleader Dhairyasheel Nalawade informed the bench that the state government had appointed a committee headed by principal secretary (planning) to design a one-time settlement scheme for settling the dues of Maharashtra State Co-operative (MSC) Bank.

As per the committee’s report – which is under consideration at the cabinet – the state government had already paid Rs270 crore to MSC Bank.

Counsel for MSC Bank, ML Patil, pointed out that the pending dues have gone up to Rs1,800 crore and the state wasn’t willing to honour sovereign guarantee under which the loans were granted to sugar factories. The judges replied that if the state government had given guarantees for the advances, it would have to clear all the dues.

To allow the state government to file an affidavit mentioning the steps taken or to be taken against erring directors of defunct sugar factories, the court has adjourned further hearing on the PIL for two weeks. The high court is currently hearing another PIL, filed by a Pune-based consultant, alleging that more than Rs40,000 crore pumped in for various schemes and packages for co-operative sugar factories have been looted by local politicians or their relatives who run these factories.