IDBI Bank, part of a group of lenders, had provided a term loan of Rs 733.85 crore and working capital limits of Rs 153.75 crore to GVK Power (Goindwal Sahib) Ltd for a coal-based thermal power plant in Punjab. GVK Energy Limited gave a corporate guarantee in July 2017 to secure the loan extended to GVK-Goindwal. GVK-Goindwal defaulted on its repayments. The account was declared a Non-Performing Asset (NPA) on 28 February 2018, with effect from 31 July 2016.
On 8 February 2019, IDBI Bank issued a recall notice to GVK Energy (corporate guarantor) demanding Rs 989.66 crore by 15 February 2019.
Though a resolution plan for GVK Power was approved in December 2023, IDBI Bank said it could recover only Rs 306 crore. The bank then approached NCLT to recover the balance from GVK Energy.
GVK Energy said that no dues existed after the resolution plan of GVK-Goindwal was approved in December 2023 and the guarantee stood extinguished under the resolution plan. Also, the guarantee was invoked by IDBI Trusteeship, not the actual creditor.The tribunal rejected GVK Energy’s argument that the debt was cleared after the resolution of GVK Power. It cited Supreme Court rulings that say a guarantor remains liable even if the main borrower has settled its dues under insolvency.The tribunal also dismissed GVK’s claim that the case was filed too late, saying it was filed well within the limitation period.
