Mauritius-based GuarantCo files insolvency petition against Dalmia Cement subsidiary

On the basis of demand notices issued by Axis Bank and HDFC Bank, GuarantCo paid an amount of ,842,267.16 and ,221,084.9 to the two banks, respectively.

Mauritius-based GuarantCo, part of the Private Infrastructure Development Group (PIDG), has filed a petition for insolvency against Calcom Cement India, a subsidiary of Dalmia Cement (Bharat), over alleged non-payment of around `100 crore.

GuarantCo, a financial creditor of the cement manufacturer, filed the insolvency petition against the company at the Guwahati bench of the National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code (IBC). According to the petition, there was a total default of around `100 crore by Calcom Cement as on September 27, 2019.

Dalmia Cement, however, said Calcom Cement had not committed any default in making payments to GuarantCo. “They are using the IBC to put pressure on Calcom Cement,” a Dalmia Cement spokesperson alleged.

GuarantCo, in its insolvency petition, said, “In and around 2007 Calcom Cement India approached the financial creditor to stand as guarantor for the loan facility(ies) it had availed from various Indian banks. The financial creditor agreed to execute guarantee(s) in favour of the Indian banks w.r.t loan facilities availed by the corporate debtor from the Indian banks (Axis Bank and HDFC Bank)…pursuant to the default made by corporate debtor in the year 2011 w.r.t loan facilities it had availed from Axis Bank and HDFC Bank, the guarantees executed by financial creditor as Guarantor were invoked by both the banks in their capacity as beneficiaries of the said Guarantees.”

On the basis of demand notices issued by Axis Bank and HDFC Bank, GuarantCo paid an amount of $10,842,267.16 and $11,221,084.9 to the two banks, respectively. “Thereafter, the financial creditor demanded the payment so made to Axis Bank and HDFC Bank pursuant to their invocation of Guarantee from the Corporate Debtor in terms of the Amended and Restated Recourse Agreement. However, the corporate debtor failed to honour its commitment in terms of the Amended and Restated Recourse Agreement,” according to the petition.

In July, 2012, the Mauritius-based company had entered into a memorandum of understanding with Calcom Cement, wherein apart from other conditions, the former had agreed to the request of the corporate debtor to settle and restructure its dues under the Amended and Restated Recourse Agreement into long-tenor loans subject to certain conditions.

When contacted, a Dalmia Cement spokesperson said, “Calcom Cement has not committed any default in making payments to Guarantco Ltd. It may be noted that the 100% outstanding bank loans of more than `500 crore of Calcom have also been pre-paid before time.” She added, “On two previous occasions, the RBI had rejected GuarantCo’s application. However after Calcom’s efforts, their third application was approved by RBI capping the payment that could be made to GuarantCo. Guarantco Ltd. is demanding more payments on different counts which are neither in consonance with the RBI approval, nor have been agreed by us. They are using the IBC to put pressure on Calcom Cement.”