Mumbai: Jyoti Structures Limited, a debt laden company has filed an application with the National Company Law Tribunal (NCLT) seeking to compel ICICI Bank Ltd and other lenders to fulfill their financial commitments under an approved resolution plan.
The company has requested the NCLT to instruct these banks to disburse their respective shares of non-fund-based (NFB) facilities as per the terms of the resolution plan, which was approved by the tribunal on March 27, 2019.
Jyoti Structures has also sought an exclusion period starting from the date of the exclusion order on August 2, 2023, extending until each respondent, including ICICI Bank, disburses the required NFB facilities.
The application argues that the financial lenders, as stipulated in the approved resolution plan, are obligated to continue providing non-fund-based facilities, such as bank guarantees and letters of credit, essential for the company's revival and operational continuity.
According to Jyoti Structures, all requirements under the approved resolution plan have been met to the satisfaction of the respondents, yet the lenders have failed to disburse the NFB limits.
The company claims that this failure has hampered its ability to capitalize on new business opportunities, affecting its cash flow and hindering its capacity to meet repayment obligations to stakeholders under the resolution plan. The delay in disbursement, the company argues, is the only reason for its inability to fulfill these obligations, a situation beyond its control.
However, the application faced strong opposition from the banks. They labeled the plea as "frivolous, baseless, and devoid of any merit," arguing that it contradicts the terms of the resolution plan and the NFB agreement, as well as the NCLT’s earlier order dated August 2, 2023.
The banks emphasized their responsibility as custodians of public funds, stressing that they must exercise caution and conduct thorough assessments of any borrower’s ability to fulfill their obligations before issuing bank guarantees or letters of credit.
The NCLT, in its order, recognized the banks' right to evaluate the financial health and operational readiness of Jyoti Structures before releasing any NFB facilities. The tribunal noted that the release of such facilities is contingent upon agreements made post-approval of the resolution plan, allowing for due diligence by the lenders.
However, the NCLT also observed that the initial release of NFB limits should have occurred as outlined in the resolution plan, enabling Jyoti Structures to implement its revival strategy. The tribunal maintained that while banks have the right to monitor the company's business performance continually and take corrective actions as needed, they were also expected to fulfill their obligations under the resolution plan promptly.
