In a major development, state-run lender Punjab National Bank has dragged Binani Industries to the National Company Law Tribunal (NCLT) as its subsidiary Edayar Zinc has committed default in repayment of the outstanding financial debt.
Binani Industries, a part of the Braj Binani Group, had stood as a corporate guarantor to a loan facility extended to Edayar Zinc by a consortium of banks, led by Punjab National Bank. As the company, which is engaged in production of various types of zinc and alloys, failed to make payment of the outstanding dues, PNB now filed insolvency petition against Binani Industries under section 7 of the Insolvency and Bankruptcy Code (IBC). According to a source, PNB’s claim from Edayar Zinc currently stands at `157 crore. The bank’s share in consortium is 37.5%.
A hearing was scheduled at the Kolkata bench of the NCLT on Monday. The counsel for the PNB, Ranajit Chowdhury, was present before the bench of the tribunal, but nobody turned up on the side of the corporate debtor. Following this, justice M. B. Gosavi said the tribunal would issue a notice upon Binani Industries. The next date of the hearing for the case is March 14.
Notably, Punjab National Bank, the financial creditor to Edayar Zinc, filed the insolvency petition against Binani Industries as the liability of the corporate guarantor is co-extensive with that of the principle debtor under section 128 of the Indian Contract Act.
PNB also had exposure to Binani Cement (BCL), later it realised the amount through selling the exposure to asset reconstruction company (ARC). Notably, following the November 19, 2018 ruling of the Supreme Court, BCL, which had been a subsidiary of Binani Industries, became a wholly-owned subsidiary of UltraTech Cement.
Bringing to an end to the long drawn-out legal battle between UltraTech Cement and Dalmia Bharat over the acquisition of Binani Cement, the Supreme Court bench of justices Nariman and Sinha on November 19 last year dismissed Rajputana Properties’ appeal against the NCLAT order, which had allowed the Aditya Birla Group flagship cement company to acquire Binani Cement (BCL) by approving its revised bid.
Edayar Zinc, in its latest annual report, said Punjab National Bank and Oriental Bank of Commerce had declared the account as NPA with effect from June 30, 2014, and in case of Punjab & Sind Bank, it was with effect from September 30, 2014.