The Madras High Court bench here has directed liquidator of the defunct Madurai Urban Cooperative Bank to send a proposal to the Centre exploring possibility of paying dues to its depositors in preference to dues to be paid to Deposit Insurance and Credit Guarantee Corporation (DICGC).
In their interim order on Thursdat on a batch of petitions filed by depositors of the bank on the issue, a division bench comprising Justice D Murugesan and Justice M Duraiswamy said the Government could act upon the liquidator’s proposal as expeditiously as possible and take an appropriate decision by invoking powers conferred on it under Sec 45 of the DICGC Act.
The counsel for the liquidator said Rs 15 crore was available for disbursal. But the entire sum should be given only to DICGC towards partial reapyment of a loan of Rs 22 crore taken immediately after the bank was closed down.
The loan was used for refunding a maximum of Rs 1 lakh to every depositor. Only after clearing dues to DICGC the liquidator could take steps to pay the depositors by collecting dues from the bank’s loan defaulters, he said. The counsel also insisted that the liquidator should not disburse the money available with him to the depositors without clearing the bank’s liability to the DICGC.
The bench, considering the fact that most of the depositors were pensioners and some of them even died pending adjudication of the writ petitions, said the matter evolved public interest and hence the Centre could take a lenient view in the matter in consultation with RBI.
The bank was wound up in 2005 after its financial position deteriorated due to various irregularities committed allegedly by its secretary and others. It was facing a loss to the tune of Rs 60 crore at the time of liquidation. Then it had to refund Rs 51.61 crore to depositors whereas its assets was only Rs 4.2crore including bad, doubtful and non performing assets.
courtesy: PTI