The Chennai bench of the National Company Law Tribunal (NCLT) has ordered the corporate insolvency resolution process (CIRP) against Siva Industries and Holdings, a Siva Group company promoted by serial entrepreneur and former promoter of Aircel C Sivasankaran, admitting a petition filed by IDBI Bank.
IDBI Bank had dragged Siva Industries to the NCLT alleging a default of `130.30 crore as on December 31, 2018, and prayed for initiation of the resolution process, in a bid to recover the dues.
The bank has pointed out that Siva Industries also failed to discharge duty of a guarantor in respect of the loans given to another group firm Rudhra Pte which defaulted in repaying `79.45 crore, as on October 1, 2018.
Ordering the insolvency resolution process, the NCLT bench comprising BSV Prakash Kumar, judicial member, said the bench was satisfied that the petitioner (IDBI Bank) has proved existence of debt and default. The bench also appointed Savan Godiawala as the interim resolution professional (RP).
The story started when Siva Ventures, which was later merged into Siva Industries and Holdings, approached IDBI Bank for working capital facilities in 2010.
Subsequently, the bank sanctioned fund-based limits in the form of cash credit to the extent of `35 crore, non-fund based limits in the form of letter of credit for `25 crore, a bank guarantee for an amount of `25 crore as inner letter of credit limit and additional treasury limits for `2 crore aggregating to `62 crore were disbursed on various dates to the company.
Later in 2011, Siva Ventures again approached IDBI Bank seeking allocation of non-fund based limit of `15 crore and loaned equivalent limit of `4.5 crore to Rudhra Energy Division which has subsequently become Rudhra Pte, over and above the original sanction already provided to the company.
In the meanwhile, Siva Ventures merged with Siva Industries and Holdings in 2013, and when the company failed to service the debt, IDBI Bank, in 2015, issued a recall notice demanding the company to pay the outstanding amount in respect of the working capital facility aggregating to `62 crore or else regularise the loan account. The bank in 2017 gave another recall notice, rejecting the one-time settlement proposal for an amount of `48.68 crore.
As Rudhra Pte failed to maintain the financial discipline and committed default, the bank in 2017 issued a demand notice asking the company to pay the defaulted amount. When the repayment was not materialised, the bank again issued notice to Rudhra Pte for recovery of the outstanding dues.
The Enforcement Directorate in February this year ordered attachment of assets of Sivasankaran worth `224.6 crore in connection with an investigation on alleged loan fraud at IDBI Bank. ED had reportedly filed a case against him and various firms for non-payment of loans to the tune of $67 million issued by the bank which Siva Group allegedly obtained for a front company, Axcel Sunshine.
Source: Financial Express, July 9, 2019