- Friday, April 26, 2024
By: Shilpa Sharma
INDIA’S IDBI Bank has secured a $239 million (£168.5m) judgment in the commercial division of the High Court of London against a Cyprus-based subsidiary of Essar Shipping Group.
It is one of largest debt judgments obtained by an Indian bank in the English courts.
Essar Shipping Group is a Mumbai-headquartered company involved in shipping and logistics business.
In March 2013, IDBI had entered into loans worth $148m (£104m) with two Singapore registered companies – Varada Drilling One Pte Ltd and Varada Drilling Two Pte Ltd – for the construction of two jack up drilling rigs.
IDH International Drilling Holdco Ltd (IDH), the Cypriot-registered parent company of the borrowers, gave a corporate guarantee for the loan. The loan and guarantee were governed by English law, therefore were subject to the jurisdiction of the English courts.
In July 2017, after the borrowers failed to make scheduled repayments, IDBI made a formal demand for repayment of the principal amount, contractual interest, default interest and fees.
After further non-payment, the borrowers entered insolvency in Singapore and, in January 2020, TLT LLP – a London-based law firm representing IDBI -commenced proceedings in the UK.
Subsequently, IDBI, IDH and Essar Capital Holdings Limited, another Essar Shipping Group company, entered into a “one-time settlement” agreement, as per which IDBI agreed to accept a partial payment in full and final settlement of the debt, provided the sum was paid on or before February 28 this year.
However, no such payment was received and, on March 1, IDBI applied for summary judgment.
On May 21, the case was heard in the Commercial Court by deputy high court judge Leigh-Ann Mulcahy QC.
“This is an important judgment both in terms of its size and the message it sends to defaulters that Indian banks are willing and able to recover outstanding debts through the English courts,” said Nick Curling, legal director at TLT LLP.
However, IDH is disappointed with the judgment and is considering its position with regard to an appeal of this judgement, a spokesman for the Essar Group said.
