World Bank to provide $348 mn for Tamil Nadu road project
New Delhi: India and the World Bank on Thursday signed the legal agreement for the Bank-assisted Tamil Nadu road sector project.

The Bank has agreed to provide a $348-million loan for the project.

The total cost of the project is estimated at $450 million with the state government contributing the balance $102 million.

The loan has a variable spread over Libor and is a dollar-denominated loan with a moratorium on principal payment for five years and a maturity of 20 years.

The project will be implemented over a period of five years and is expected to be completed by September 30, 2008.
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Supreme Court comes down hard on securitisation law
New Delhi: Finding serious illegalities in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, the Supreme Court today allowed Attorney-General Soli Sorabjee, financial institutions and defaulting companies to come up with suggestions to cure defects in the law. The hearing has been adjourned till September 15.

The Bench headed by Chief Justice V N Khare observed that the law was now heavily in favour of lenders.

The judges also observed that the law might require redrafting. "Assets cannot be sold in a closed room," Khare remarked.

The areas on which there were fierce arguments in court included takeover of borrowers' assets without adjudication of claims, no reference to lenders' responsibility, absence of procedures in the Act, the condition that 75 per cent of the claim should be paid before the borrower can approach the debt recovery tribunal and absence of any provision for obtaining interim stay.

Kapil Sibal, senior counsel representing Mardia Chemicals, against which lenders have moved under the seizure law, resumed arguments on behalf of the defaulters, stressing that "no law in the civilised world allowed takeover of assets of a company without the intervention of the court".

He said that the Securitisation Act was passed in haste without reference to the parliamentary standing committee and an Ordinance was turned into the legislation, he said, adding that the Act carried several unconstitutionalities.

Sorabjee said the law was passed to meet an emergency situation when non-performing assets (NPAs) accumulated in enormous proportions.

At one time, Sorabjee suggested that since the issues involved were far-reaching, a Constitution Bench should hear the nearly 100 petitions before the court. Most of them were transferred to the Supreme Court from high courts.
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