Six Indian banks have prevailed in their legal struggle in London to collect payment of $2.1 billion from a GVK group company located in Singapore that had fallen behind on loan repayments. The Bank of Baroda, Bank of India, Canara Bank, ICICI Bank, Indian Overseas Bank, and Axis Bank are entitled to $1 billion in interest and $1.1 billion of the original amount outstanding, according to Dame Clare Moulder's ruling at the London High Court.
With the exception of Axis Bank, the security agent, Indian banks gave GVK Coal Developers (Singapore) a $1 billion loan in September 2011, a $35 million letter of credit facility, and a $250 million loan in March 2014. After taking $160 million out of the 2014 loan and drawing down on the $1 billion, GVK stopped making its payments.
After demands for payment were unsuccessful, the six banks brought the case against GVK Coal Developers in the commercial court of the high court as well as against various companies within the GVK Group in Singapore and India.
The court heard that GVK had intended to use the loans to part-finance coal mining projects in Australia but failed to obtain a mining licence. In its defence, GVK said that “the deterioration in the market for coal, the lack of third party investment and legal challenges to the mining projects in the courts of Queensland meant that very little progress was made to develop the Hancock Companies’ mining assets”.