Swiber Offshore India has appealed to the Bombay High Court to stop state-run Oil and Natural Gas Corporation from invoking a bank guarantee of $105 million (about Rs 7 billion) after the offshore construction and support services provider’s Singapore-based parent ran into financial troubles. The Indian subsidiary of Swiber Holding Ltd had furnished the bank guarantee last year after bagging a construction, maintenance and service contract from ONGC.
The genesis of the dispute lies in a liquidation application filed by Swiber Holding Ltd and Swiber Construction Pte in a Singapore court and approval sought to appoint judicial managers to help the company reorganise its business. Judicial management is an equivalent of the Board for Industrial and Financial Reconstruction (BIFR), which helps sick industrial units revive in India. The state run Indian oil and gas company said that it is entitled to invoke the bank guarantee as per the agreement with Swiber Offshore India since the latter had filed for judicial management.
However, Swiber Offshore India argued in the high court that it is very much in a position to fulfil its contractual obligations of work and said that invocation of the bank guarantee will hurt the company. It has assured the court that it will obtain suitable court orders from the Singapore Court so that ONGC’s projects do not suffer. The company said that its quantum of work for ONGC, including both ongoing and executed projects, stands at about $800 million (about Rs 53 billion). Justice SJ Kathawala posted the matter for further hearing on August 11 and directed the lenders who have issued the bank guarantees that they will have to abide by the orders passed by the Indian courts.
Nishith Dhruva, managing partner of law firm MDP Partners, which is representing ONGC in the matter, confirmed the development but declined to divulge more since the matter is sub judice. Raj Panchmatia, partner at Khaitan & Co, which is representing Swiber Offshore India in the matter, and Huzefa Nasikwala, founder of Nasikwala Law Office, which is representing DBS, a bank that had issued the bank guarantee, refused to comment on the matter. Max Scherzer Womens JerseyShare This