IDBI Bank has received a $ 239 million fine in the London High Court trading session against a Cypriot Indian subsidiary based by Essar Shipping Group, which is believed to be one of the largest indictments the Indian bank has received in the English courts.
IDBI based in Mumbai had secured a loan of USD 148 million from two Singapore-registered companies – Varada Drilling One Pte Ltd and Varada Drilling Two Pte Ltd – for the construction of two jack up rigs in March 2013.
IDH International Drilling Holdco Ltd (IDH), a Cypriot-registered parent company for lenders, has provided a guarantee of co-operation regarding loans. Loans and guarantees were governed by English law and were therefore subject to the jurisdiction of the English courts.
“This is an important decision in terms of its size and the message we send to those who make a mistake is that Indian banks are willing and able to repay outstanding debts through the English courts,” said Nick Curling, legal director of TLT LLP, a London-based law firm. representing IDBI.
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According to the law firm, in July 2017, after borrowers failed to pay the planned payment, the IDBI filed a formal claim for capital payments, contract interest, interest payments and fees.
After further default, borrowers began to close in Singapore and, in January 2020, TLT began a UK trial on behalf of the IDBI.
Subsequently, IDBI, IDH and Essar Capital Holdings Limited, another Essar Shipping Group company, entered into a “single payment” agreement in accordance with which the IDBI agreed to accept partial and final repayment of the loan, as long as the funds paid before or before February 28 this year.
No such payment was received and, on March 1, the IDBI filed a summary judgment, stating that there was no real IDH hope to successfully defend the claim in the case.
The case was heard in the Commercial Court on May 21 by Deputy Judge Leigh-Ann Mulcahy QC.
There was no statement from Essar Group.
The TLT team, which included Indian banking expert Paul Gair (partner) and Alex Morris (lawyer), said the case demonstrates the ability of Indian banks to track down creditors and issuers in the UK.
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The law firm currently represents the merger of 13 Indian banks led by State Bank of India in enforcing a $ 1.145 billion debt restitution case against Vijay Mallya, 65, a former Kingfisher Airlines manager who is now out of work.
Mallya, who is accused of defaulting on a bank loan of more than Rs 9,000 million, has been in the UK since March 2016.
