A local unit of Singapore’s Swiber Holdings Ltd, which is battling bankruptcy at home, has got a breather after the Bombay High Court directed state-run explorer Oil & Natural Gas Corporation to release $21 million to the oilfield services contractor that it can use partly to pay its Indian vendors.
The division bench of Justice VM Kanade and Justice Swapna Joshi also told Swiber that it will have to distribute $8.4 million of the total $21 million to its creditors in India and around $11.1 million to the judicial manager appointed by the Singapore High Court to handle its liquidation proceedings.
The remaining amount is to be used for paying taxes. The division bench said that if income tax authorities permit Swiber to pay the tax it owes in installments then that amount should be added to the $11.1 million set aside for the judicial manager.
The directive came after some Indian vendors of Swiber challenged a single-bench order asking ONGC to release $21 million to two Swiber group companies to make payments to their creditors overseas.
The domestic vendors of Swiber include Seamec Ltd, Triton Maritime Pvt. Ltd, SS Offshores Pvt. Ltd, TAG Offshore and Bhoir Dredging Pvt. Ltd.
The Indian subsidiary of Swiber is working on the Daman pipeline replacement project of ONGC. The project, after completion, is likely to contribute about 10% of the country’s projected gas production during the next 10 years.
Swiber and ONGC got into a dispute in August when the Indian explorer sought to invoke four performance bank guarantees totaling $105 million (around Rs 700 crore) fearing that the Singapore firm, which had earlier filed for liquidation, might not be able to finish work on three of its projects.
Swiber Offshore India Pvt. Ltd then approached the Bombay High Court against ONGC. It argued that it can finish all work by the May 2017 deadline if ONGC doesn’t invoke the bank guarantee.
Swiber argued that the project can’t proceed further if it doesn’t receive money that it needs to make payments to PT Gunanusa Uthama Fabricators, Indonesia, Petrovietnam Technical Services Mechanical & Construction of Vietnam and other key vendors.
In September, ONGC and Swiber Offshore decided to settle the dispute through consent terms.
ONGC has so far released about $447 million (Rs 2,977 crore) to Swiber companies for the three ongoing projects. If the project proceeds, ONGC will be required to release $320 million more by May 2017.
The court will next hear the matter on 26 October.
Senior counsel Ravi Kadam and Birendra Saraf along with Nishit Dhruva, managing partner at MDP & Partners, are representing ONGC in the matter. Swiber Offshore is being represented by senior counsel FE Devitrie and law firm DSK Legal. The creditors are being represented by Wadia Gandy & Co and Khare Legal Chambers.
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