Ex-steelmaker Sanjay Singal loses in £150 million claim case in UK court

Sanjay Singal, who furnished guarantees as part of the loan agreements, was the CMD of the company at the time the loans were advanced. He was not present at the court hearing, he was earlier represented by English lawyers, but has not been playing an active part in the case.

The commercial division of the England and Wales high court on Tuesday ruled against Sanjay Singal, former chairman and managing director of Bhushan Power & Steel Ltd, awarding Germany-based claimants £150 million, besides litigation costs of over £365,000.

There have been no recoveries from BPSL since June 2018. (Reuters File Photo)

The claims are against three loans advanced by two linked German institutions, KfW and KfW Ipex-Bank GMBH to BPSL in 2009 and 2013. Singal has reportedly been arrested and bailed in India during the court hearing in London.

The loans advanced were intended for BPSL to acquire machinery and equipment for what was known as Stage IV and Phase VI of a construction project at its facility in Orissa. Under the loan agreements, any dispute was to be settled in English courts.

Singal, who furnished guarantees as part of the loan agreements, was the CMD of the company at the time the loans were advanced. He was not present at the court hearing, he was earlier represented by English lawyers, but has not been playing an active part in the case.

Judge Christopher Hancock noted that BPSL entered into a form of insolvency process under the Indian Insolvency and Bankruptcy Code 2016 known as the Resolution Process, but rejected Singal’s denial of liability to repay the loans on the ground that BPSL is subject to the Indian insolvency process.

The judgement said: “By participating as creditors in BPSL’s insolvency, the Claimants did not submit their claims against anyone else (eg Mr Singal) to the jurisdiction of the Indian Courts. Nor has there been any order in the BPSL insolvency purporting to affect those claims”.

“On the contrary, the BPSL Resolution Plan expressly makes clear that the rights of BPSL’s creditors to sue under guarantees of BPSL debts are unaffected: see Schedule B to the Resolution Plan at 1.8(f)”, it added.

Judge Hancock said: “I have concluded that it is clear that Mr Singal has no real prospect of successfully defending this claim, and that accordingly the Claimants are entitled to summary judgment”.

“I am, further, satisfied, having been taken through the Schedule in which the quantum of the Claimants’ loss is particularised, and the documents supporting that schedule, that the Claimants are entitled to the sums claimed”.