IDBI Bank has settled a $ 239 million judgment in the commercial division of the High Court of London against a Cypriot subsidiary of India-based Essar Shipping Group, becoming one of the largest debt judgments obtained by an Indian bank in the English courts.
A spokesman for the Essar Group stated that IDH International Drilling Holdco Ltd, the Cypriot-registered parent company of the borrowers, is disappointed with the judgment and is considering its position with regard to an appeal of this judgement.
IDBI had entered into loans a total of $148 million 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 in March 2013. IDH gave a corporate guarantee in respect of the loan. The loan and guarantee were governed by English law and were therefore subject to the jurisdiction of the English courts.
“This is a significant 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,” stated Nick Curling, legal director at TLT LLP, the London law firm representing IDBI. According to the law firm, in July 2017, after the borrowers failed to make scheduled repayments, IDBI served a formal demand for repayment of the principal amount, contractual interest, default interest and fees.
After further non-payment, the borrowers entered liquidation in Singapore and, in January 2020, TLT commenced proceedings in the UK on behalf of IDBI. Subsequently, IDBI, IDH and Essar Capital Holdings Limited, another Essar Shipping Group company, entered into a “one time settlement” agreement pursuant to which IDBI agreed to accept partial payment in full and final settlement of the debt, provided the sum was paid on or before February 28 this year.
No such payment was received and, on March 1, IDBI applied for summary judgment, arguing there was no real prospect of IDH successfully defending the claim at trial. The case was heard in the Commercial Court on May 21 by Deputy High Court Judge Leigh-Ann Mulcahy QC.
DH is disappointed with the judgment as it had consistently argued that this debt was subject to a settlement arrangement reached with the lenders in 2020 and which is in the process of being implemented (and that remains the case)," the spokesman for the Essar Group said in a statement.
"An affiliate of IDH has already paid 10 per cent down payment pursuant to that settlement arrangement and is confident of implementing the final stages of this settlement in next few months on completion of certain outstanding conditions. IDH is considering its position with regard to an appeal of this judgment,” the spokesman stated.