The National Company Law Tribunal (NCLT), Chennai Bench, has ordered initiation of insolvency proceedings against L&T Halol - Shamlaji Tollway Ltd (L&T Halol) on a petition filed by Oriental Bank of Commerce (OBC), which alleged that the company had defaulted in repayment of ₹76.68 crore as on December 27, 2018.

L&T Halol was a special purpose vehicle of L&T Infrastructure Development Projects Ltd to augment the 173-km long, two-lane road to a four-lane divided road from Halol to Shamlaji on State Highway 5 in Gujarat on a Build-Operate-Transfer (Toll) basis.

The company said that there was no default in repayment on the debt. Even if there was a default, the bank on its own cannot independently initiate proceedings against the company, said information in the order by BSV Prakash Kumar, member (Judicial), NCLT Chennai Bench.

₹155-crore loan

OBC had disbursed to the company a loan of ₹155 crore in 2009.

However, the company failed to service the debt, and the account was declared as an NPA by the bank on June 31, 2016. The company also failed to make it a Standard Account.

The bank and other lenders entered into Master Restructuring Agreement (MRA) in February 2017 to convert the debt of ₹405.82 crore into equity out of total debt of ₹1,000 crore payable to the consortium of banks.

The bank’s counsel told NCLT that since the company had taken amount from various banks and failed to service the loan, Gujarat State Road Development Corporation Ltd was asked to take share of ₹210 crore equity by December 2017 out of the proposed conversion of debt of ₹410 crore into equity.

However, as GSRDCL did not take the equity share within 90 days from the effective date, the bank had every right to reverse the waivers and concession that were provided under the MRA and to proceed against the company on the due amount.

The bank in September 2018 said that since the company failed to comply with the concessions mentioned in MRA, it gave a ‘recall’ notice demanding repayment of debt of ₹78.27 crore within seven days. Since the company failed to repay, the bank initiated this insolvency proceedings.

IRP appointed

NCLT order said that bank has proved the existence of debt and default.

The Bench admits the application for insolvency process, and also appointed Anil Kumar Birla as Interim Resolution Professional, the order said.