Six Indian banks, namely Canara Bank, ICICI Bank, Bank of Baroda, Bank of India, Axis Bank and Indian Overseas Bank, have sued Singapore's GVK Coal Developers for Rs 12,114 crore ($1.5 billion) plus interest in the London High Court, a report by The Times of India said.
The banks have sued the GVK Group-owned GVK Coal Developers over dispute on a $1-billion loan and $35-million letter of credit facility that five banks lent to the company in 2011 and a $160-million loan lent in 2014, the report said. The banks have claimed that GVK defaulted on all these loans.
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Nine other GVK Group firms, which were guarantors for the loans, are also being sued in the case that will open on Monday. Out of 9, 7 firms are based in Singapore, and the other two in India's Secunderabad.
The conglomerate has denied breaching the agreement. It has also denied owing the $1.5 billion loan.
The banks said, according to TOI, that GVK did not make certain repayments after they failed to get a mining lease by December 31, 2012 in the Alpha project in Australia's Queensland. The project was a milestone that had to be satisfied, the banks added.
They wrote to GVK in November 2020, informing that they had cancelled the agreement and requested for repayment, the banks said. However, neither GVK, nor any of its guarantors paid back the sum owed by them, the six banks said.
In its defence, GVK said that it took the loan to fund its acquisition of the Hancock firms in Australia to develop its assets, including the Alpha project, into working coal mines, TOI reported.
GVK stated, “The deterioration in the market for coal, the lack of third-party investment, legal challenges to the mining projects in the courts of Queensland, meant that very little progress was made to develop the mining assets.”.
While GVK said that it failed to get the lease due to litigation by environmental groups, it denied a “default”.