Team Blitz India
NEW DELHI: In a landmark victory, six Indian banks have successfully won a case in the London High Court amounting to $2.1 billion against a Singapore subsidiary of the GVK group, which had defaulted on its loan obligations. GVK Group had raised the loan through a consortium of five banks- Bank of Baroda, Bank of India, Canara Bank, ICICI Bank, and Indian Overseas Bank. The 6th bank, Axis Bank, acted as the security agent.
As per official reports, “This assistance included a $1 billion loan, a $35 million letter of credit facility, and a subsequent $250 million loan granted in March 2014. GVK drew upon the $1 billion loan and utilised $160 million from the 2014 loan.” However, GVK later failed to meet its financial obligations, resulting in a breach of payment terms.
The court proceedings revealed that GVK had raised the loan with the intent to fund its coal mining ventures in Australia, but they had to shelve the project due to its inability to secure a mining licence.
In its defence, GVK blamed unfavourable conditions within the coal market, a dearth of third-party investments, and legal disputes surrounding the mining initiatives in the Queensland courts. They also cited the downturn in the Indian infrastructure sector during that period as a contributing factor to the challenges faced.
The judgment reiterates the significance of honouring financial obligations and serves as a significant outcome for the banking institutions involved. This ruling was made by Dame Clare Moulder in the High Court in London.
Karishma Vora, barrister for the banks, and Gautam Bhattacharyya, partner at Reed Smith, the solicitors representing the banks, stated, “We are delighted to have secured a resounding and landmark victory for our Indian banking clients in a matter of such commercial significance.”
