Dalmia Cement to appeal to NCLAT to save its subsidiary Calcom

Dalmia Bharat Cement is planning to appeal to the National Company Law Appellate Tribunal (NCLAT) to turn down the order of the Guwahati Bench of National Company Law Tribunal (NCLT) which ordered commencement of insolvency proceedings against its subsidiary Calcom Cement.

Calcom was admitted to NCLT following an appeal from Mauritius based GuarantCo Ltd, a financial creditor who has alleged dues of Rs 100 crore.

Sources close to the development said that Dalmia Bharat is currently studying the order of NCLT and will soon be appealing to NCLAT against the order.

A person close to Dalmia Bharat said that the plea will be based on its argument that NCLT is yet to decide on the pre-existing dispute between Calcom and GuarantCo over the rate of interest – the origin of the conflict.

“There is a pre-existing dispute with the interest component. It first needs to be settled; but NCLT has admitted Calcom”, the person argued.

Sources said while GuarantCo has been asking for an interest rate of 8.5 per cent over its loan, Dalmia Bharat is contending that the rate is lower than what the creditor is claiming.

In 2008, GuarantCo had guaranteed a loan availed by Calcom from Axis Bank and HDFC Bank which subsequently Calcom failed to pay. GuarantCo then repaid the loans, on behalf of Calcom, and sought reimbursement from Calcom. However, the rate of interest was unspecified in the agreement and the repayment was supposed to happen in terms of US Dollar.

“The rate of the Dollar had fluctuated since then which is also a root of the problem”, the source close to Dalmia Bharat said.

In 2012 GuarantCo initiated legal action against Calcom which was later withdrawn by GuarantCo after an agreement was signed between Calcom and GuarantCo over repayment of the amount due which later on also got approval from RBI in the year 2017. 

Dalmia Bharat acquired Calcom in 2012 and took over its liabilities.

A person close to GuarantCo claimed that Calcom failed to honour the terms of the agreement as well as the RBI approval especially with payment of interest.

Calcom’s main contention was that there was no default on the part of Calcom and it has paid as per the agreed schedule. Calcom also argued that the rate of interest as fixed for the transaction was floating subject to a maximum cap of 8.5 per cent, as per the approval of RBI. Whereas, the argument of GurantCo was that admittedly there is default of payment of three instalments by Calcom and also Calcom did not pay the agreed rate of interest which was 8.5 per cent as per approval of RBI and as agreed between the parties.

Additionally, GurantCo alleged that Calcom had been trying to delay in making the payment including taking the ground that financial creditor needs to issue invoices to receive the payment despite there being no such requirement for the invoices since the payment to be made by Calcom was as per an RBI approval towards payment of the guarantee amount paid by GurantCo.