Plea to exempt directors from legal action rejected
THE BOMBAY High Court today dismissed the plea of the State Government for exempting nominee directors on the Board of Directors of Madhya Pradesh State Industries Development Corporation (MPSIDC) from legal proceedings because they were on corporation?s board in ex-officio capacity.india Updated: May 04, 2006 14:00 IST
THE BOMBAY High Court today dismissed the plea of the State Government for exempting nominee directors on the Board of Directors of Madhya Pradesh State Industries Development Corporation (MPSIDC) from legal proceedings because they were on corporation’s board in ex-officio capacity.
The Bombay High Court today did not accept the Madhya Pradesh Government’s appeal of exempting the then nominee directors of MPSIDC in the case filed by Mumbai District Central Co-operative Bank for realising the loan amount of Rs 151 crore due on MPSIDC.
The Bank had moved the court after the cheque given by the MPSIDC towards repayment bounced. The bank filed a criminal case against the directors of MPSIDC under Section 138 of the Negotiable Instrument Act.
Though the State Government would move the Supreme Court against Bombay High Court’s verdict, it has to appear before the apex court for clarifying its position.
Officers who would be affected by the decision include former Chief Secretary Vijay Singh, who is presently posted as Secretary, Indian System of Medicines. In addition to Singh, other senior officers of MP cadre include M K Roy, P C Sen (retired), Sudhir Nath, D R S Choudhary, S R Mohanty, K Suresh, Shailendra Singh and S K Vashishtha.
Former chairmen of MPSIDC and former Industry minister Narendra Nahata and Banshilal Gandhi along with some senior officers of the MPSIDC were also made party in the case.
Last month a lower court had issued non-bailable warrants against MPSIDC directors. While the full time directors of the corporation had arranged an anticipatory bail from upper court, nominee directors were also optimistic to get some relief from the High Court.
Even the State Government cited some recent judgments and amendments in the Negotiable Instrument Act the High Court learnt to have dismissed government stand by saying that all these amendments were made after this incident.
The MPSIDC had availed loan of Rs 90 crore from the bank under its controversial Inter Corporate Deposit Scheme (ICD) and failed to repay the money, which piled up to Rs 151 crore, despite several reminders and notices served by the Bank.
Highly placed sources told the Hindustan Times that MPSIDC had issued some post-dated cheques to the bank, which were bounced due to non-availability of funds. This forced the bank authorities to registered criminal cases against senior officers of Madhya Pradesh.
Taking a bold step, the bank management has filed a criminal case against senior officers who held top posts in Commerce and Industries and Finance departments.
Against the verdict of lower court, the State Government has moved Bombay HC but lost the case today. In a bid to save the senior officers of Madhya Pradesh from facing any embarrassing situation in the court, the State Government had taken a plea that majority of them were not directly involved in the episode and they were only heading C&I and Finance departments.