A legal dispute over derivatives contracts between a number of Indian banks and their clients escalated in April when ICICI Bank filed a criminal suit against Sundaram Multi Pap.
Sundaram Multi Pap had earlier filed a suit against ICICI for the “mis-selling of certain foreign exchange derivatives contracts for speculative purposes”. The company claims it has lost more than US$725,000 from four derivatives contracts
ICICI Bank filed the criminal suit after a cheque issued by Sundaram Multi Pap bounced. The bank submitted the cheque for clearance to recover part of the losses that the company had suffered from the derivatives contracts, but payment was declined. The bank has also approached the Debt Recovery Tribunal (DRT) in Mumbai to recover dues from Sundaram Multi Pap and was able to obtain an injunction barring any of Sundaram’s directors from leaving the country without the court’s permission.