Reliance Naval and Engineering on Friday informed the Ahmedabad bench of the National Company Law Tribunal (NCLT) that the purpose of a loan of Rs 202.22 crore taken by erstwhile promoters of Pipavav Marine and Offshore was ‘fraudulent’ and therefore void. The case will be heard on December 19.
“It may be noted that the very purpose for which the loan was taken by the erstwhile promoters was fraudulent and not truly disclosed to the corporate debtor (Reliance Naval),” the company said in response to an insolvency petition by the Industrial Finance Corporation of India (IFCI).

The company said records do not show how the acquisition of six companies with land parcels in Uttar Pradesh for the “corporate business purposes of the loan as per the corporate loan agreement was integrated with the business of the principal borrower (Reliance Marine and Offshore), or how the land parcels held by them were relevant to the business”.

According to the petition, Reliance Marine had in July requested lenders to invoke pledged shares of Reliance Naval and SKIL Infrastructure worth Rs 62.13 crore and adjust the sale proceeds with the outstanding debt. The petition added that although lenders still have Rs 90 crore worth of securities lying with them, they have still filed an insolvency petition.

In May, IFCI had recalled the loan of Rs 143.14 crore and asked Reliance Marine to repay it. “A joint lenders’ forum meeting (JLF) was called by IDBI Bank on November 18, 2017… During the meeting, all lenders of Reliance Naval were apprised of the filing of the present petition by IFCI and all lenders requested IFCI to withdraw proceedings and arrive at an amicable solution,” Reliance Naval’s reply said.
Last month, IFCI had filed two insolvency petitions – the first against Reliance Naval and Engineering and another against its subsidiary Reliance Marine and Offshore – under the Insolvency and Bankruptcy Code (IBC).

Reliance Naval and Engineering reported a net loss of Rs 523 crore in 2016-17, marginally smaller than Rs 528-crore loss reported in 2015-16. The firm’s website claims it is the first company in the private sector to have obtained a licence and contract to build warships and has six subsidiaries, including one in Singapore.
Reliance Naval’s debt stood at Rs 8,951 crore in FY17, according to Bloomberg data. As on September 30, promoters held a 30.70% stake in the company.