Treatment of dues of State Electricity Boards.
c.v.naik
(Querist) 02 April 2010
This query is : Resolved
Dear Friends
In Maharashtra , a company failed to pay electricity dues, which were in dispute then, to Maharashtra State Electricity Board(MSEB).
In 2006, the company lost civil suit filed against it by the MSEB to recover the dues in a concern district court. The company could not settle the issue with Maharashtra State Electricity Distribution Ltd, (MSEDL) a legal successor of MSEB.
MSEDL has now applied in the same district court for court decree to acquire the company property.
A private sector bank, in which I have joined as employee on contract terms, has provided credit facilities to the company secured by mortgaged of its entire fixed assets and by hypothecation of its current assets. All directors of the company have also given their personal guarantee to the bank.
In the matter, as a banker I would like to know the following points.
1. Whether MESB dues being a statutory Govt. Body, in this case will be treated by the district court as Govt. dues and recovered as land revenue arrears.
2. In that case what will be position of the bank security?
3. While giving electricity connection, the MSEB had taken some amount of security deposit which already has been adjusted. None of the directors has given personal guarantee to the MSEB. Still can MSEDL take possession of their property?
4. Though the company is not financially sound, it is serving bank loan properly for which many time company directors pumped in large fund in it. Whether court will direct us to stop the company operation and dispose of its property jointly with MSEDL.
I shall be grateful if you advice me, preferably by quoting specific court cases or at least legal provisions
Raj Kumar Makkad
(Expert) 02 April 2010
1. Yes.
2. Bank has first lien over the mortgaged properties in the given case.
3. No. If the connection is in the name of company and no personal guarantee was given by directors to it then their personal properties are not liable to be disposed off while recovering dues from company.
4. Civil court generally do not pass any order without hearing the affected party in such cases means you shall also be provided an opportunity of hearing in case such order is required to be passed in the interest of justice.
