The National Company Law Tribunal (NCLT) at Hyderabad has admitted an insolvency petition filed by ICICI Bank against GVK Power and Infrastructure..A coram of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri passed the order on a petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016."...we admit the Application/Petition under Section 7 of IBC, subject to the conditions that the Financial Creditor shall pay the stamp duty as per table in Para No.13 of IA 374/2023 within 15 days. The moratorium is declared for the purposes referred to in section 14 of the Code," the order stated..In 2011, ICICI sanctioned a term loan facility of $1 billion (US) and a letter of credit facility of $35 million to GVK Coal Developers for acquiring coal mines in Australia. GVK Power (corporate debtor) and GVK Natural Resources were the Indian guarantors for the repayment of the loan. A corporate guarantee was also undertaken.In March 2016, ICICI came to know that the GVK group was considering selling its stake in Bangalore International Airport Limited (BIAL) without the consent of its lenders. The Bank thus filed an injunction application before a United Kingdom court, before which GVK said it would not sell its stake in BIAL.The following year, the accounts of GVK Coal Developers were declared non-performing assets (NPA) on failure to repay the loan. As a result, its lenders filed claims before the UK court for a total of over $850 million. The UK court held in favour of the lenders in a judgment passed in October 2023.In November 2020, ICICI had invoked the corporate guarantee and demanded repayment of over $600 million. GVK showed its inability to honour the payments, but committed to repaying the same upon working a solution with the Adani Group..Before the NCLT, GVK made the following contentions, among others:- There is no debt and default as contemplated under Section 7 IBC.- ICICI's petition has been filed in violation of Section 10A of the IBC, as the debt alleged to have become due during the period of March 2020 to March 2021 when the Corporate Insolvency Resolution process could not be initiated.- The petition has been filed to recover the debts and not for insolvency and liquidation of GVK Power & Infra and, therefore, hit by Section 65 IBC (fraudulent or malicious initiation of proceedings).- In view of the proceedings before the UK court, ICICI's petition is premature and would result in parallel proceedings and contradictory conclusions by two different forums- The claim is in contravention of Reserve Bank of India (RBI) circulars, which had deferred repayment of all loans with effect from March 1, 2020 until August 31, 2020 in view of the COVID-19 pandemic.- GVK's liability cannot be determined till the debt is crystalised and eventually a shortfall is determined by the court..The NCLT arrived at the following findings, among others:- Judgment of the UK court is admissible in evidence in the present proceedings, as it arises from the same contract.- Cause of action against the guarantor will start to run when the guarantee deed was invoked and the guarantor commits breach by not complying with the demand (November 2, 2020). This is the actual date of default, and the present application has been filed within the limitation period.- Date of default (November 2, 2020) is hit by Section 10-A, but this provision is not applicable to subsequent default on account of UK court judgment of 2023 as the prohibited period does not extinguish the debt owed by GVK or the right of ICICI Bank to recover it.- Guarantee agreements give concurrent jurisdiction to the Indian courts in insolvency proceedings against GVK. Territorial jurisdiction of NCLT to decide a case under IBC cannot be taken away by facility agreements between the parties.- Granting of any relief as per RBI circulars issued during COVID-19 was left to the discretion of the lending institutions..ICICI Bank was represented by Senior Advocate Vivek Reddy and Advocates Siddharth Ranade, VVSN Raju, Nishi Bhankharia, Vishal Pathak and Aviva Jogani.Advocates Karthik Nayar, Krish Karla and Kashish Bansal appeared for GVK Power and Infrastructure..[Read order]
The National Company Law Tribunal (NCLT) at Hyderabad has admitted an insolvency petition filed by ICICI Bank against GVK Power and Infrastructure..A coram of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri passed the order on a petition filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016."...we admit the Application/Petition under Section 7 of IBC, subject to the conditions that the Financial Creditor shall pay the stamp duty as per table in Para No.13 of IA 374/2023 within 15 days. The moratorium is declared for the purposes referred to in section 14 of the Code," the order stated..In 2011, ICICI sanctioned a term loan facility of $1 billion (US) and a letter of credit facility of $35 million to GVK Coal Developers for acquiring coal mines in Australia. GVK Power (corporate debtor) and GVK Natural Resources were the Indian guarantors for the repayment of the loan. A corporate guarantee was also undertaken.In March 2016, ICICI came to know that the GVK group was considering selling its stake in Bangalore International Airport Limited (BIAL) without the consent of its lenders. The Bank thus filed an injunction application before a United Kingdom court, before which GVK said it would not sell its stake in BIAL.The following year, the accounts of GVK Coal Developers were declared non-performing assets (NPA) on failure to repay the loan. As a result, its lenders filed claims before the UK court for a total of over $850 million. The UK court held in favour of the lenders in a judgment passed in October 2023.In November 2020, ICICI had invoked the corporate guarantee and demanded repayment of over $600 million. GVK showed its inability to honour the payments, but committed to repaying the same upon working a solution with the Adani Group..Before the NCLT, GVK made the following contentions, among others:- There is no debt and default as contemplated under Section 7 IBC.- ICICI's petition has been filed in violation of Section 10A of the IBC, as the debt alleged to have become due during the period of March 2020 to March 2021 when the Corporate Insolvency Resolution process could not be initiated.- The petition has been filed to recover the debts and not for insolvency and liquidation of GVK Power & Infra and, therefore, hit by Section 65 IBC (fraudulent or malicious initiation of proceedings).- In view of the proceedings before the UK court, ICICI's petition is premature and would result in parallel proceedings and contradictory conclusions by two different forums- The claim is in contravention of Reserve Bank of India (RBI) circulars, which had deferred repayment of all loans with effect from March 1, 2020 until August 31, 2020 in view of the COVID-19 pandemic.- GVK's liability cannot be determined till the debt is crystalised and eventually a shortfall is determined by the court..The NCLT arrived at the following findings, among others:- Judgment of the UK court is admissible in evidence in the present proceedings, as it arises from the same contract.- Cause of action against the guarantor will start to run when the guarantee deed was invoked and the guarantor commits breach by not complying with the demand (November 2, 2020). This is the actual date of default, and the present application has been filed within the limitation period.- Date of default (November 2, 2020) is hit by Section 10-A, but this provision is not applicable to subsequent default on account of UK court judgment of 2023 as the prohibited period does not extinguish the debt owed by GVK or the right of ICICI Bank to recover it.- Guarantee agreements give concurrent jurisdiction to the Indian courts in insolvency proceedings against GVK. Territorial jurisdiction of NCLT to decide a case under IBC cannot be taken away by facility agreements between the parties.- Granting of any relief as per RBI circulars issued during COVID-19 was left to the discretion of the lending institutions..ICICI Bank was represented by Senior Advocate Vivek Reddy and Advocates Siddharth Ranade, VVSN Raju, Nishi Bhankharia, Vishal Pathak and Aviva Jogani.Advocates Karthik Nayar, Krish Karla and Kashish Bansal appeared for GVK Power and Infrastructure..[Read order]
