SBI’s plea to initiate insolvency proceedings was accepted by a two-judge bench on Tuesday. VR Badarinath Nandula and S Ranjan Prasad, show documents accessed by ET. SBI was the third lender to file a petition against the company. previous arguments by Bank of Baroda ,bob) And Canara Bank are still pending before the Tribunal.
A person involved in the process said, ‘It is a case of third time lucky. Now banks can start joint recovery of their dues as this account has been lying bad for years. The company did not respond to an email seeking comment by press time.
BoB’s petition against the company is pending for more than a year. Earlier this month, a two-judge bench comprising Srinivasa Chitturu and P Bhaskar Mohan had reserved its order to allow BoB’s plea. Canara Bank also filed a petition before the Hyderabad bench of the NCLT, as reported by ET in its October 2 edition.
To be sure, the latest plea by SBI was accepted ex parte as no lawyer representing the company was present in the court. Bankers expect the company to challenge it.
“It is a company with very good connections. They will still try to stop it. But now it has been accepted that we have gone a step ahead. Besides, other petitions of Bank of Baroda and Canara are still pending and The court will definitely look into it.” said a banker.
Gayathri Projects is promoted by T Subbarami Reddy, former member of Rajya Sabha and filmmaker. According to the company’s website, his wife T Indira Reddy is the non-executive chairperson and son TV Sandeep Kumar Reddy is the managing director.
BoB is the lead lender in the nine-member consortium with 28% debt, while Canara holds 31%. SBI’s stake is a relatively meager 5%. Federal Bank, Punjab National Bank, Union Bank of India, Bank of Maharashtra And Indian Overseas Bank There are other creditors of the company.
A failed restructuring plan launched in 2015 and subsequent default has led to the account being marked as a non-performing asset (NPA). Some lenders, including BoB, have sold pledged shares of the company on the open market and flagged the account as fraudulent after finding evidence that the company allegedly diverted payments to fictitious subcontractors and used fraudulent means to cancel contracts. Still never recovered. The company has filed a petition in the Telangana High Court against such draconian action by the lenders.
Lenders are still hopeful that some money can be saved as road, water and irrigation projects are underway across the country.