The Bombay High Court has asked Madhucon Infra Ltd to explain why it shouldn’t initiate action against the road developer for contempt in a case filed by Tata Capital Financial Service Ltd.
The unit of Tata Capital Ltd had approached the court after the Hyderabad-based company failed to repay Rs 25 crore in loans. A division bench of the high court comprising Justice VM Kanade and Justice Swapna S Joshi, on 24 August, gave Madhucon Infra time till 23 September to respond.
Madhucon Infra had borrowed around Rs 50 crore from Tata Capital Financial and its parent Madhucon Projects Ltd stood guarantor for the loan.
The dispute began when Mumbai-listed Madhucon Projects said in October 2015 that it agreed to sell a 74% stake in Madhucon Agra Jaipur Expressways Ltd to Singapore's Cube Highways and Infrastructure Pte Ltd for Rs 248 crore. Cube Highways is the Indian investment platform of private equity firm I Squared Capital.
Madhucon Agra Jaipur Expressways operates the stretch between Bharatpur and Mahua in Rajasthan on the expressway that connects the tourist hubs of Agra and Jaipur.
According to Tata Capital Financial’s petition, Madhucon Projects failed to inform the lender about the transaction. The petition said that, on 18 February 2016, both parties agreed that the road developer would keep Rs 25 crore in a separate bank account by the first week of March as security for claims till the court decides on the dispute.
Under the terms of the consent agreement filed in court at the time, Madhucon Projects was allowed to sell the 74% stake and it agreed to deposit Rs 25 crore from the first tranche of money it would get from the stake sale.
However, Madhucon Projects failed to deposit Rs 25 crore and on 12 April it said the deal with Cube Highways had been completed, according to the petition. This prompted Tata Capital Financial to file a contempt petition in the court.
Ashok Paranjpe, managing partner at law firm MDP & Partners, which is representing Tata Capital Financial, confirmed the filing of the contempt petition and the court’s directions but refused to make any other comments. An email query and phone calls to Madhucon Projects did not elicit any response.
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