TLT secures US$239m debt judgment for IDBI Bank against Essar Shipping Group subsidiary

TLT has secured a US$239m judgment for IDBI Bank against a Cypriot subsidiary of Indian-based Essar Shipping Group.

The result is one of the largest ever debt judgments obtained by an Indian bank in the English courts and demonstrates the ability of Indian banks to pursue defaulting borrowers and guarantors in the UK. 

IDBI had entered into loans totalling US$148m with two Singaporean 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 International Drilling Holdco Ltd (IDH), the Cypriot-registered parent company of the borrowers, gave a corporate guarantee in respect of the loan. The loan and guarantee were governed by English law and were subject to the jurisdiction of the English courts.

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 a partial payment in full and final settlement of the debt, provided the sum was paid on or before 28 February 2021. 

No such payment was received and, on 1 March 2021, 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 21 May 2021 by Leigh-Ann Mulcahy QC sitting as a deputy High Court judge. 

The judge rejected IDH’s allegations that the demand on the borrowers was not validly served such that no sums were due. She found there was credible evidence that the demands had been sent in accordance with the contractual provisions, noting there was no evidence provided by IDH to the contrary. The judge also rejected IDH’s arguments that the sums claimed were wrong and that further demands should have been made for default interest and fees accruing after the date of the formal demand, not least on the basis that this bore no relation to commercial reality.

The TLT team included Indian banking litigation specialists Paul Gair (partner), Nick Curling (legal director) and Alex Morris (solicitor), based in London. 

Nick Curling, legal director at TLT, says: “This is an important 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. We are pleased to have once again acted for IDBI and secured this judgment for them.” 

TLT is also currently representing a consortium of 13 Indian banks led by State Bank of India in enforcing a £1.145bn debt recovery judgment against Indian businessman Vijay Mallya. 

In April 2021, TLT also secured a US$45m debt judgment for Bank of Baroda (Dubai), Bank of India (London), Union Bank of India (Hong Kong) and Export Import Bank of India (Mumbai) against a borrower based in the British Virgin Islands, a corporate guarantor based in Nigeria and a personal guarantor and promoter of the wider Sandesara group, Mr Nitin Sandesara.