The Supreme Court also said that state governments cannot enlarge the list of VIPs eligible for red beacon
The Supreme Court on Tuesday held that red beacon be allowed to be used only by persons holding constitutional posts and high dignitaries to prevent its misuse by local politicians flaunting it as a status symbol.
A Bench headed by Justice GS Singhvi asked the union government to issue a fresh list of people eligible for using red beacon on their vehicles and asked the government to amend the rule within three months.
The Bench also said the state governments cannot enlarge the list of VIPs eligible for red beacon. The court passed the order on a public interest litigation (PIL) filed by Uttar Pradesh resident Abhay Singh on the misuse of red beacon.
Earlier, the Bench had said that misuse of red beacon and siren, granted by government to VIPs, was a menace to society and it must be stopped.
It had said the red light has become a status symbol and that police personnel, who are put on duty for giving security cover to VIPs, should be deployed for better purposes like making the roads safe for women.
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Pramod Mittal represents but one example of the quiet, high-stakes game of rich, influential bank defaulters that often misuse the CDR route without a slight change in their lavish lifestyle or spending
Pramod Mittal, the younger brother of steel tycoon Lakshmi Mittal, owes a lot of money to Indian banks. However, instead of repaying bank loans, both Pramod and his brother Vinod Mittal have managed to use the corporate debt restructuring (CDR) route repeatedly to escape unscathed. Surprisingly, despite being a bank defaulter, Pramod Mittal has reportedly spent 60 million Euros (about Rs505 crore) for his daughter’s lavish wedding in Barcelona.
According to a report from Vanitatis (Spanish news portal), the wedding of investment banker Gulraj Behl and Shristi Mittal, the 26-year old daughter of Pramod Mittal and exercise director of Global Resources of Europe, could become one of the five most expensive weddings in history, as per the figures. "One of the employees of the municipality that is well connected to high places told us that probably the figure among all parties, lodging, rental of premises, hotel rooms and other expenses to be determined, could exceed 60 million Euros. So, according to Forbes, this wedding would be located in the second, between Mohammed bin Zayed Al Nahyan, ruler of Abu Dhabi, and Princess Salama, where it cost 76.25 million Euros in 1981 and of the Prince of Wales, for which 53 million Euros was paid in that year also. For now, Lakshmi Mittal's daughter, Vanisha, holds third place when she married in 2004 with Amit Bhatia, the Indian billionaire and disbursed no more and no less than 46 million Euros," the report says.
Pramod Mittal wanted discretion for this wedding but his ostentation made news. Mumbai Mirror, using quotes from Spanish media had said politicians and prominent citizens trashed the whole affair (the Mittal wedding) as 'obscene display of wealth' for which 'the national pride was on sale'.
Coming back to Pramod Mittal's outstanding bank dues, as reported by Moneylife, during the end 2010, State Bank of India (SBI) gave a fresh loan worth Rs130 crore to Ispat Industries (it was controlled by the Mittals at that time) adjusting Rs30 crore against earlier dues.
So, why would the bank sanction a fresh loan if it has to take back part of the money? Apparently, SBI was indulging in what is called ‘evergreening’. By getting back part of the money, SBI has avoided classifying the loan as 'bad' which would have forced a series of actions. But SBI's action is in violation of the spirit of the Reserve Bank of India (RBI) guidelines. When Moneylife contacted them about this largesse, both SBI and Ispat Industries kept mum at that time.
Ispat Industries has failed to live up to every commitment it made as part of the corporate debt restructuring package so generously approved by lenders in 2003.
Pointing out that the credit appraisal committees of public sector banks (PSBs) had powers to sanction single loans up to Rs400 crore in the case of large banks and up to Rs250 crore in the case of small banks, Vishwas Utagi, general secretary, Maharashtra State Bank Employees Federation, an affiliate of All India Bank Employees' Association (AIBEA), alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.
According to the bank employee union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off band debts worth Rs1.4 lakh crore. Top four defaulters of state-run banks constitute Rs23,000 crore of NPAs, the AIBEA said.
On 15 September 2010, Ispat shares soared in the foolish hope of a lender-blessed takeover, but fell immediately when the company denied as ‘baseless’ a report claiming that lending institutions had threatened to sell Ispat’s debt-converted-to-equity to rivals such as Arcelor Mittal or Tata Steel. The Mittals claimed in a statement that “the lenders have reposed tremendous faith in the company since its incorporation”—a fact that ought to trigger a full-fledged government investigation.
This was just repetition of earlier scene. In July 2006, when Ispat wasn’t repaying lenders, a media report said that ICICI Bank wanted to force Ispat’s merger with Jindal Steel. At that time, it was already clear that the Mittals had squandered an excellent opportunity to ride the commodity boom and take advantage of the massive write-offs granted to all steel companies under what was to be a one-time CDR exercise. Within hours, the Mittals denied the report and the lenders didn’t attempt to change the management either. Instead, they quietly cleared an unprecedented second CDR, which was officially disallowed under the Reserve Bank of India (RBI) rules unless it was accompanied by a change in management.
In the same year, the lenders watched silently as Ispat’s losses continued to mount but the Mittals splurged 14 million Euros to acquire a Bulgarian football club.
Quoting business analyst and author Alam Srinivas from Governance Now, the Hindustan Times, said, “Instead of trying to get back their money lent to Ispat, the banks helped the promoters to continue their unviable ways."
As on 30 June 2010, Ispat Industries owed over Rs7,200 crore to 15 lenders and had overdues exceeding Rs400 crore while its consolidated loss stood at Rs323 crore for a 15-month period.
However, both Pramod and Vinod Mittal ran out of their luck by the end of 2010. Three things sealed the fate of Ispat as it was taken over by Sajjan Jindal-led JSW Steel. Firstly, pressure from government agencies, especially the Income Tax department that conducted nationwide raids/searches on the company and its promoters. Secondly, lenders were under severe pressure because they would have to declare over Rs10,000 crore of outstanding borrowings as bad loans if some solution was not found before 31 March 2011. Also, with the loan-for-share scam having badly burned lenders such as Life Insurance Corp of India (LIC) and LIC Housing Finance, even the most sympathetic lenders were scared to bend the rules for the Mittal brothers once again. Finally, Ispat was unable to pay salaries and utility bills and it was clear that any delay in selling the plant would have led to vandalisation and reduced value.
Ispat Industries got their debt restructured in 2003 and 2009, with promises to complete unfinished parts of their steel projects and even sell expensive flats.
Samar Halarnkar wrote in his article in Hindustan Times, that "In small towns, we found angry workers and rusting factories, but the owners led unchanging, caviar lifestyles. We found heated swimming pools, rooftop helipads, foreign homes, fast cars — and humungous loans."
"It was only in 2010, when the Mittal brothers asked for another debt restructuring that banks — after more than a decade of throwing good money after bad — forced them to sell the company. A year later, in an Istanbul palace, Pramod organised for his daughter one of the biggest, fattest Indian weddings the Turks had ever seen," the report says.
In short, while lenders use all methods to recover dues from aam admi or the common man, when it comes to rich, influential and resourceful defaulters, there are different rules for extending the debt line and life.