Six Indian banks — Bank of Baroda, Bank of India, Canara Bank, ICICI Bank, Indian Overseas Bank and Axis Bank — are suing GVK Coal Developers (Singapore) — part of the GVK Group — for $1. 5 billion (Rs 12,114 crore) plus interest, in the London high court.

The dispute is over a $1-billion loan and $35-million letter of credit facility that five of the banks lent to GVK in 2011, plus a $160-million loan lent in 2014, that the banks claim GVK defaulted on.

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Nine other GVK Group companies — seven in Singapore and two based in Secunderabad, India, which were guarantors for the loans — are also being sued in the case, which opens Monday. GVK denies it is in breach of the agreements and denies that $1. 5 billion is owed.

The banks state in their claim that GVK failed to make certain repayments as they fell due and failed to obtain a mining lease in the Alpha project in Queensland, Australia by December 31, 2012, which was a project milestone that had to be satisfied. The banks wrote to GVK in November 2020 cancelling the agreement and requesting repayment. But neither GVK nor its guarantors has paid any of the sums owed, the banks claim.

GVK, in its defence, states that the purpose of the loans was to provide part funding for the acquisition of the Hancock companies in Australia to develop their assets — including the Alpha project — into working coal mines.

“The deterioration in the market for coal, the lack of third-party investment, legal challenges to the mining projects in the courts of Queensland, meant that very little progress was made to develop the mining assets,” GVK states. GVK states it could not obtain the mining lease owing to litigation by environmental groups but denies this was a “default”.

(With inputs from agencies)