NEW DELHI, MAY 28: ICICI has challenged in the Delhi high court the Sick Industries Companies Act (SICA) provision giving immunity to sick companies from payment of dues saying the provisions of the Act had blocked a staggering Rs 17,921 crore in over 21,000 such companies.The leading financial institution said that recovery of debts and dues from sick companies was not possible under the SICA, which was alarmingly increasing the non-performing assets (NPA).A division bench comprising Chief Justice Arijit Passayat and Justice DK Jain, while allowing an impleadment petition by ICICI last week said, the matter would be taken up for hearing on August 2 along with a similar public interest litigation (PIL) pending before the court.ICICI in its petition said as per the Confederation of Indian Industry's (CII) latest survey, the gross NPA of public sector banks had increased from Rs 39,253 crore in March 1993 to approximately Rs 51,710 crore at present, which was about 16 per cent of their gross advance in the market.The companies were "abusing" the SICA provision by getting themselves registered as sick with the Board for Industrial and Financial Reconstruction (BIFR), the ICICI said adding it was evident from the fact that till November 30, 1999 out of 666 cases decided by the bureau 223 were not found to be genuine.The BIFR had registered a total of 4001 cases since its constitution in 1987 and 84 per cent of them seemed to be a clear case of "attempting to stall the recovery process", the ICICI in its petition said.ICICI, which had to recover Rs 1,953 crore from the sick industries said BIFR had registered a total of 4,001 cases since its constitution in 1987 and 84 per cent of them seemed to be a clear case of "attempting to stall the recovery process".The pending PIL by advocate BL Wadhera had alleged that majority of the companies had registered themselves as sick with BIFR just to avoid payment of sales tax.Since their cases were pending before the bureau, the tax authorities could not initiate legal proceedings against them for recovery as the companies were taking the plea that their cases were yet to be decided by BIFR, Wadhera in his petition had said. The worst affected of the financial institutions are: ICICI, IDBI, IFCI Sidbi, Nabard, NHB, Exim Bank and IDBI, ICICI said.It said if the Reserve Bank of India (RBI) guidelines issued to deal with the problem had been made applicable to the sick industries, the net ratio of NPA should have come down to about eight per cent by March 31, 1996. The recoveries from the sick industries mainly related to total loan assets, foreign currency loans, lease exposure and debentures, interest not taken credit for and write offs.
