IDBI Bank seeks ROC help over nominee director dispute with NTADCL

IDBI Bank has written to the Registrar of Companies (ROC), over the exclusions of nominee directors from board meetings of New Tirupur Area Development Corporation Ltd (NTADCL) post-loan repayment. The public sector bank has raised governance concerns, in its letter said, that despite provisions in the Master Restructuring Agreement (MRA) allowing their retention until all dues are settled, the directors are excluded.
The company, involved in a water treatment and supply project in Tirupur, Tamil Nadu, faced financial challenges leading to a Corporate Debt Restructuring (CDR) in 2011, restructuring debts totaling Rs. 575.34 crore.

Following the restructuring, IDBI Bank and other lenders converted senior debt into equity, with IDBI Bank holding Rs. 6.11 crore in equity shares. A Master Restructuring Agreement (MRA) allowed lenders, including IDBI Bank, to appoint nomiee directors on the company’s board. However, post-loan repayment, the company excluded IDBI Bank and SBI‘s nominee directors from board meetings, citing vacancy due to loan repayment, according to the letter.

IDBI Bank, referring to clauses in the MRA, Articles of Association (AoA), and Companies Act, 2013, asserted its right to retain Nominee Directors until all dues are cleared. Despite explanations, the company persisted in excluding nominee directors, leading IDBI Bank to seek ROC’s intervention, the letter shows.

Although the company has repaid outstanding loans to CDR lenders, except those to IL&FS, lenders still hold equity worth Rs. 86.30 crore in the company’s share capital, the reason why IDBI Bank believes it requires to nominate directors to focus on continued involvement in governance matters.