Axis Bank NSE 0.14 % has dragged two more Lanco NSE -1.75 % group companies to the bankruptcy court for defaulting on their loans, intensifying an ongoing legal battle between the private sector bank and the Hyderabad-based infrastructure and energy group, two people familiar with the development said.
Axis had in August last year filed an insolvency petition against Lanco Amarkantak Power, a Chhattisgarh-based thermal power project of Lanco group, which the latter has challenged. The two sides are locked in a legal tussle at the National Company Law Tribunal.
India’s third-largest private sector bank has now lodged insolvency cases against Lanco Kondapalli Power, an Andhra Pradesh-based gas-fired power project, and Lanco Solar, which manufactures solar panels and sets up rooftop solar projects, the sources said. NCLT admitted its plea for admission of Lanco Kondapalli Power for insolvency proceedings last week.
The gas-based power project is partly operational, but subsequent phases of its development have been hampered due to lack of fuel supply. The solar panel manufacturing business has also failed to service its loans due to financial stress at the group’s holding company.
The two companies collectively owe banks around Rs 4,000 crore, with Axis Bank accounting for a major portion of the loans disbursed to them, said the sources cited earlier. “As a policy, the bank does not comment on client specific matters,” a spokesperson for Axis Bank said in response to ET’s queries. Queries mailed to Lanco group remained unanswered until press time on Monday.
Lanco had opposed Axis Bank’s insolvency plea against the 1920-megawatt Lanco Amarkantak Power on grounds that the petition was filed in accordance with a Reserve Bank of India (RBI) circular issued in February last year, which was recently quashed by the Supreme Court (SC).
The RBI circular had mandated lenders to take defaulting borrowers to bankruptcy court within six months of them failing to repay their loans.
“The process is going to be fraught with litigation, as the company is clearly resisting going down the insolvency route and banks have no other options but to act tough,” a banker said on condition of anonymity.
Lanco Amarkantak Power owes banks around Rs 9,000 crore. “Kondapalli Power is one of the first cases to be admitted after the Supreme Court judgement on the RBI circular,” said Bishwajit Dubey, partner at law firm Cyril Amarchand Mangaldas, who appeared for Axis Bank.
Hyderabad-based lawyer DVAS Ravi Prasad is representing Lanco in the NCLT proceedings.
Source: Economic Times