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Lenders can claim dues only after arbitration is over: Bombay High Court

The Bombay High Court has ruled that if a company involved in a dispute has sought arbitration, its lenders must wait for the proceedings to conclude before taking steps to get their money back. The court directed a consortium of lenders led by IDBI to wait for arbitrators to pass an interim award in a row between road builder Kalyan Sangam Infratech and the Maharashtra government before moving to recover Rs 250 crore owed by the company.

If the dues aren't paid by June 30, after the arbitration is over, then the lenders can sell shares pledged by the company, Justice GS Patel said in his order dated April 10. Kalyan Sangam Infratech, which was contracted to build a bridge in the state, is seeking compensation from the government after toll for some users was reduced.

Kalyan Sangam Infratech was incorporated in 2008 to construct the South Kasheli and North Kasheli bridge in Thane district on a build, operate and transfer basis. A tax policy announced in July 2009 gave vehicles operating within a 5 km radius a substantial discount in toll rates, which the company said affected the profitability and feasibility of the project.

The company also sought to terminate the concession agreement with the Maharashtra government and the dispute was referred to a three-member arbitration panel.

To fund projects, Madhya Pradesh-based Kalyan Sangam Infratech had taken a five-year term loan from the consortium of banks in 2010, with the promoters pledging about 20 lakh shares of group company Sangam (India) Ltd as security.

Article referred: http://economictimes.indiatimes.com/industry/banking/finance/banking/lenders-can-claim-dues-only-after-arbitration-is-over-bombay-high-court/articleshow/47066525.cms

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