The NTC mill imbroglio has had a novel fallout -- for the first time, an Indian financial institution has refused to honour an assignment agreement with another bank relating to a NTC mill land sale.
ICICI Bank had entered into an assignment agreement with Infrastructure Development Finance Corporation (IDFC) to sell a part of its exposure to IndiaBulls that it had extended to fund the acquisition of Jupiter Textile Mill's land in Mumbai.
ICICI Bank had extended Rs 165 crore (Rs 1.65 billion) to IndiaBulls for its Rs 276-crore (Rs 2.76 billion) mill land acquisition. Thereafter, it entered into the agreement with IDFC to sell down part of its exposure.
IDFC was supposed to take an exposure of Rs 77 crore (Rs 770 million) but dropped out after signing the agreement. "This kind of breach of contract is unprecedented," said an industry source.
An ICICI Bank executive confirmed the development but did not elaborate on it.
The IDFC brass declined to comment. Sources said IndiaBulls pre-paid the fund to ICICI Bank this week which IDFC would have taken in its books.
IDFC reportedly developed cold feet and backed out of the deal to finance IndiaBulls because the sale of mill land in Mumbai got stuck in legal hassles.
The Bombay High Court had invalidated the sale of land of all five National Textile Corporation mills. The court asked the government to allow only one-third of the land to be used for commercial purposes.
The five deals, which were affected, included those of Bombay Textile Mills (Rs 702 crore), Jupiter Mills (Rs 276 crore), Kohinoor Mills (Rs 421 crore), Apollo Textile Mills (Rs 180 crore) and Elphinston Mills (Rs 441.80 crore).
In March 2005, IndiaBulls had purchased NTC-owned Jupiter Mills for Rs 275 crore (Rs 2.75 billion). IndiaBulls bought the 11.11-acre Jupiter Mills in a joint venture with US-based Farallon Investments.
On July 21, IndiaBulls had bought eight acres of land of Elphinston Mill at Lower Parel in Mumbai for Rs 441 crore (Rs 4.41 billion), at Rs 8,500 a sq ft.