BIS had acquired the 4 Oxygen plants from erstwhile Bhushan Steel in 2015 under the deleveraging exercise undertaken by the lenders
Tata Steel had reached out to the UK government in April this year seeking loan against the Coronavirus crisis.
Brace Iron and Steel (BIS) on Thursday moved the Delhi high court accusing Tata Steel BSL of defaulting in payment of its lease rentals for using its 4 Oxygen plants/leased equipment at the latter’s integrated steel plant in Meramandli, Odisha.
Seeking immediate payment of the entire defaulted amount of Rs 79 crore including interest, it urged the HC to restrain the Tata firm from using its equipment till admitted monthly lease rentals are paid. Justice V Kameswar Rao while issuing notice to Tata Steel posted the matter for further hearing on September 25. Tatas were represented by senior counsel Arvind Nigam.
Alleging Tatas of creating an artificial liquidity crunch for BIS by willfully defaulting in monthly lease payments, the petition stated that the non-payment of its liabilities to banks will lead to the petitioner’s insolvency and Tatas would achieve its “ill-conceived goal of acquiring the 4 Oxygen plants by seeking huge discounts from FIs of their public monies”.
BIS senior counsel C A Sundaram argued that as a direct consequence of non-payment of the monthly rentals by Tatas, BIS, which is wholly owned by Bharat Nirman Fund, a scheme of SREI Alternative Investment Trust, is being forced to face “an onerous financial situation in form of increasing debt liability to the lender/FIs,” he said, adding that this default in rental will lead to BIS’ bankruptcy and “the respondent would achieve its ill- conceived goal of acquiring the 4 Oxygen plants/leased equipment by seeking huge discounts from financial institutions of their public monies”.
BIS had acquired the 4 Oxygen plants from erstwhile Bhushan Steel in 2015 under the deleveraging exercise undertaken by the lenders. “Thus the plants are essentially owned and controlled by banks and FIs through the petitioner,” the petition filed through Sharad Kumar, partner, Lexster Law stated.
He further said that BIS had entered into separate agreements with lenders to raise Rs 1,000 crore for getting equipment. Later, the parties executed the agreement for leasing the equipment that mandated monthly consideration of Rs 18 crore, according to the petition.
Bhushan Steel was acquired by Tata Steel in 2016 and was renamed a Tata Steel BSL since November 2018. Since March, Tata failed to comply with contractual obligations of timely rental payments, thereby committing fundamental breach of the agreement aimed at “crippling” the petitioner from timely servicing its loans. Even Tatas had forced it to opt for moratorium on its bank dues thereby increasing the petitioner’s liability owed to the banks, it said.