What 6 Indian banks vs Singapore’s GVK unpaid loans case in London high court is all about

Singapore's GVK Coal Developers owes $1 billion and $159,973,008 to six Indian banks. (Photo: Monstera Production via Pexels)

GVK tried to sell Bengaluru and Mumbai airports without the knowledge of six Indian banks whom it owed $1 billion and $159,973,008 under two loan facilities disbursed in 2011 and 2014, respectively. These loans still remain unpaid and are now the subject of a trial in the high court in London. On the very first day of the trial on Tuesday, 10 October, GVK made an application to adjourn the proceedings, which was rejected by the judge Dame Clare Moulder.

In documents lodged with the court, Indian banks have submitted that the “defendants have borrowed large sums of money under sophisticated and detailed contracts. They have twice tried to alienate their assets, the Bengaluru airport and the Mumbai airport, without the knowledge of the lenders.” From the sale of the Bengaluru airport, GVK paid $83 million after negotiating with Indian banks to not go ahead with an injunction against the sale.

Facing such damning allegations and unpaid loans for over a decade, GVK’s first move was to seek adjournment through an Indian lawyer who in the first place was not given rights of audience by the court. The Indian banks — Bank of Baroda, Bank of India, Canara Bank, ICICI Bank Limited, Indian Overseas Bank, Axis Bank — represented by barrister Karishma Vora, instructed by Gautam Bhattacharyya and Akshay Sevak of Reed Smith, opposed the adjournment application citing, among other issues, the defendants’ history of changing legal teams. So the trial continues to which we come later after a brief description of the dispute.

The case

GVK Coal Developers, which is incorporated in Singapore and is part of the GVK group, had interests in Australian coal and infrastructure projects. The six India banks had financed the acquisition of projects in Australia through loans given in 2011 and 2014. Eight other GVK group companies were corporate guarantors for the 2011 loans and are defendants along with GVK Coal Developers. The guarantors include GVK Power and Infrastructure Limited the parent company of the GVK group.

Due to the sums being unpaid and other associated disputes the banks approached the high court in London in November 2020. After a number of case management hearings the trial was set for June 2022. However, taking into consideration the need to incorporate expert evidence on Indian law, as pointed out by GVK, Justice Cockerill adjourned the hearing following which it came to be listed after a year in October 2023.

GVK informed Justice Cockerill that they would be submitting an expert report prepared by Justice Vikramjit Sen, former judge of the Supreme Court of India. A timetable going forward for the evidence on Indian law was then set. Accordingly, the Indian banks engaged Justice Suresh Gupte, former judge of the Bombay High Court. GVK was represented by the law firm Norton Rose Fulbright.

The current trial

Just days before the trial was scheduled to begin it emerged that GVK had parted company with Norton Rose, and informed the court that they were actively seeking new legal representation. On Tuesday, Kartik Nayar, an Indian lawyer, as representative of GVK, appeared in court to make submissions on behalf of the defendants. No other representatives or GVK officials were present in court or on the video link.

Judge Dame Clare Moulder declined permission to Nayar to address the court noting that he is not an English qualified lawyer. She also declined to adjourn the proceedings to allow GVK to engage a new legal team noting that they could have done that earlier.

“This is somewhat surprising as the defendants have been communicating by email in relation to these proceedings through the legal department of the first defendant with the court and the claimants’ solicitors over the past week and one might have assumed that someone from the legal department at the very least would have been present via the remote link, given the significance of this claim and the amount at issue of over $2 billion.”

So, what was supposed to be a much anticipated big ticket trial with a two-week window has been reduced to a truncated version largely due to the conduct by GVK. Krishnakumar Ramasubramanian of ICICI Bank, which has the largest exposure in these syndicated loans and is the leading bank in the proceedings, recorded his evidence on Wednesday on the issue of quantum, and Justice Gupte is slated to give evidence through video link.

The trial was postponed in June 2022 on GVK’s application so that the court could have expert evidence on Indian law. Ironically, now that the trial has commenced, only the Indian banks and not GVK will have done that.