Trial in Indian banks' US$1.5 billion lawsuit against GVK postponed to October 2023

LONDON: A judge has adjourned the trial of 10 GVK Group companies which are being sued by six Indian banks for US$1.5 billion (Rs 12,114 crore) plus interest in the UK high court after hearing the demand for payments could be unlawful since Covid-19 was declared a “force majeure” event in India and the Reserve Bank of India had imposed a moratorium on charging interest during the pandemic.
The trial will now take place in October 2023.
The Indian banks are suing GVK Coal Developers (Singapore) Pte Ltd for US$1.5 billion for defaulting on loan repayments. They are also suing nine other GVK group companies, seven in Singapore and two in India, which provided guarantees or indemnities for the loans.
The two-week trial was scheduled to start on Monday. But on the first day of the trial, the GVK companies put in applications to adjourn the trial and amend their defence to include evidence from from a former judge of the supreme court of India, Justice Sen. His evidence states that the banks had been “precluded from charging default interest during a certain period during a moratorium from the RBI in India owing to Covid-19”" and that these provisions of Indian law made the enforcement of the contract unlawful.
Sen said that since the banks were all incorporated in India, the banks were bound by directives issued by the Reserve Bank of India, which had imposed a moratorium on default or penal interest during a specific period from 27 March 2020.
Richard Power, representing GVK, referring to Sen's evidence, added that since the government of India declared the pandemic a force majeure, and has not declared it over yet, no sums were due at all. "Any judgment that ignores Indian law will be unenforceable," Power said.
Judge Sara Cockerill gave permission for the trial to be adjourned in order for the new evidence to be added to the defence's case, saying that “RBI moratoria could invalidate notices or affect the quantum of the case”. “Mr Justice Sen says RBI circulars have the force as Indian law so any judgment of the UK courts in violation of the same would constitute a breach of Indian law and make any such judgment unenforceable,” she said, adding it was “arguable” that a force majeure event could make the contract unlawful.
Joe-han Ho, representing the Indian banks, argued against adjournment, saying this was “breach of agreement claim" in which "the numbers are enormous." "It is common ground there have been very limited payments on the principle and interest," he said. The "risk of concerns about insolvency" are self-evident.