30 May 2019: The Chennai Bench of the National Company Law Tribunal (NCLT) has ordered initiation of the corporate insolvency and resolution process (CIRP) against Chennai-based infrastructure company Marg, the original promoter of the Karaikal Port.
The insolvency proceeding was ordered against the company, which was into a number of infra projects including airport and metro in its hey days, on a petition filed by ICICI Bank, alleging a default of `71.69 crore.
The NCLT Bench ruled ICICI Bank has proved existence of debt and default against Marg by showing various documents and the certificate issued by the Debt Recovery Tribunal, Chennai for an amount of `71.69 crore, in favour of the bank.
“Since Marg counsel has not come out with an argument stating that debt and default were not in existence, we are of the considered view that this case is fit for admission,” the Bench said, appointing Vasudevan as the interim resolution professional (IRP).
ICICI Bank had sanctioned a rupee term loan facility of `165 crore on execution of a credit arrangement letter (CAL) dated December 31, 2009, to enable Marg to finance up to 50% contribution in the business plan of establishing Karaikal Port (KPPL) by equity participation and capital expenditure.
The terms and conditions of the said facility were changed at the request of Marg on April 7, 2010, incorporating setting up of New Chennai Township Private (NCTPL), besides Kariakal Port. Another modification was done and the loan was disbursed. The repayment of the loan was to be made in 21 equated quarterly instalments starting from July 2, 2011.
When Marg failed to repay as agreed, ICICI Bank initiated DRT proceedings upon which DRT Chennai issued debt recovery certificate in favour of the bank in 2018 for an amount of `71.69 crore, along with interest at the rate of 6% from the date of decree till the date of realisation.
The NCLT Bench observed that there is a strong case of debt and default against the company, pointing out the guarantee deed executed by by NCTPL, GRK Reddy and Rajini Reddy, the promoters of Marg.
“Though the case was filed on April 26, 2018, Marg has failed to repay the claim amount, except every time saying that it was trying for settlement,” the Bench said.
Marg has developed residential townships, airports, power utilities, ports and other infrastructure projects across the country. Later it went into problems with several of its projects getting stalled and delayed, throwing the company into financial mess.
Its flagship residential project Swarnabhoomi of 250 flats on 630 acre plunged into controversy with regards to special economic zone norms and got stalled. GRK Reddy was arrested in November 2017 in connection with cheating cases by the Central Crime Branch (CCB) in connection with the Swarnabhoomi project.
When Marg had got into trouble with `1,800-crore debt to various banks, Edelweiss ARC in 2015 bought 97% of Kariakal Ports’ debt from various banks.