News: NCLT dismisses GVFL Trustee Company's debt claim against Hubtown-15-12-2021
The Mumbai bench of the bankruptcy court, while dismissing the petition filed by GVFL under the Insolvency and Bankruptcy Code (IBC) against the BSElisted company, has also clarified that “a shareholder is different from a lender”
The National Company Law Tribunal (NCLT), in a relief to real estate developer Hubtown, has rejected venture finance firm GVFL Trustee Company’s claim of around Rs 150 crore against the company. The Mumbai bench of the bankruptcy court, while dismissing the petition filed by GVFL under the Insolvency and Bankruptcy Code (IBC) against the BSE-listed company, has also clarified that “a shareholder is different from a lender”. GVFL had filed four petitions, claiming that it, as a secured shareholder, was entitled under the shareholder agreement to call upon the developer, as the original promoter, to buy back its shares at a minimum 26% internal rate of return
(IRR) per annum. Ahmedabad-based GVFL, formerly Gujarat Venture Finance Ltd, had also claimed that its investment in Hubtown Bus Terminal (Mehsana) Pvt Ltd, a special purpose vehicle of Hubtown, to be a debt exposure, including principal and the IRR until August 2018. It claimed that the developer was in default as its put option was not entertained when a demand notice was sent on January 2, 2018, seeking an exit of the investment. Law firm MDP & Partners’ managing partner, Nishit Dhruva, who represented Hubtown along with senior advocate Venkatesh Dhond, confirmed the NCLT ruling but refused to divulge any details. ET's email to GVFL seeking comment remained unanswered at press time Tuesday. The NCLT dismissed GVFL’s petitions late last month on several grounds. One of the reasons was that the claim under the IBC was filed much after the deadline of three years from the cause of action, which in this case was the right claimed by the venture firm to enforce the buy back. Also, the shares were purchased by GVFL from the IL&FS Group and not directly from Hubtown. NCLT observed that there was no money paid or transferred by GVFL to Hubtown. It also agreed to Hubtown’s contention that there was no debt payable by it to GVFL. Mumbai-based Hubtown had argued that if there was a buyback obligation, the shares were needed to be valued and, if there was any dispute about the valuation, it was required to be determined by an arbitrator. Arbitration proceedings were already in progress and till that was decided, the petition under the IBC was not maintainable, it said. Also, under the shareholder agreement, GVFL could exercise any right of buyback only after taking the consent of other shareholders, but since that was not taken, the right to enforce the buyback was not maintainable, Hubtown had argued.
