Hindustan Powerprojects has begun to invoke Rs. 500 crore bank guarantees of Lanco Infratech, citing non-fulfilment of a work contract, triggering abitter row between the companies.
Lanco, which is already facing the heat from lenders, has written to nine banks urging them not to allow encashment of bank guarantees it had submitted as the contractor for Hindustan Powerprojects’ Annupur power project in Madhya Pradesh. In its note to bankers, Lanco has alleged serious malpractices by Hindustan Powerprojects which it says are worthy of official investigation.
Lanco did not respond to ET’s queries but Hindustan Powerprojects has strongly denied the allegations and said it had exercised its legal rights to protect the interests of stakeholders. “Considering the unfulfilled contractual obligations, Hindustan Power exercised the legal remedial action that is available to the company as part of its contract. Lanco Infratech had approached the High court for an injunction against Hindustan Power from encashing the bank guarantee which the Hon’ble court had rejected on Saturday, 01/07/2017,” the company said in an emailed response to ET’s query.
Lanco told bankers in its letter, seen by ET, that encashing bank guarantees was discussed at a meeting between Hindustan Powerprojects Chairman Ratul Puri and Lanco Executive Chairman L Madhusudan Rao on June 30 at a hotel in Delhi. Lanco alleges that in the course of the meeting attempts were made to allure its chairman to agree with the encashment of bank guarantees. It further alleged that Hindustan Powerproject’s chairman had said that his company needed money to tide over its own financial difficulties.
Hindustan Powerprojects denied these allegations. “Hindustan Power has always followed the highest standards of integrity in the truest spirit and denies the baseless allegations made by Lanco Infratech with an intention to thwart the legal recourse available to us,” it said.
“With a view to safeguard the interests of our stakeholders and the operations of the thermal asset, the company had to encash the bank guarantees. To put things in perspective, Hindustan Power has multiple claims against Lanco Infrastructure including large cash advances and unfinished work at the thermal site,” it said. Lanco has demanded a CBI enquiry into the matter and stated that in 2013 Hindustan Powerprojects coerced Lanco to exit bidding process for power supply to Uttar Pradesh by threatening to encash the same bank guarantees.