Madras High Court Says It Cannot “Bow Down” To NPA Threat, Upholds Attachment Against SEPC, Twarit

On 21 September, the Madras High Court dismissed SEPC Limited's plea to recall or keep in abeyance the attachment of Rs. 154.63 crore in trade receivables during enforcement of a foreign arbitral award against SEPC and Twarit Consultancy Services Private Limited.

Justice K. Kumaresh Babu refused to lift or keep the attachment in abeyance, holding that the Court could not “bow down” to the argument that its continuation could affect the companies' business or lead to their assets being classified as non-performing assets. The Bench observed:

“The arguments made by the Judgment Debtors as well as the Consortium banks is the nature of intimidation that if the order of attachment is continued, the Judgment Debtors would fall as non-performing assets which would not be helpful for any of the parties. An attempt had been made by the first Judgment Debtor that it is a going concern and if the order of attachment continues, it would have to lose its business if the trade receivables are not re-infused into the Company for further operation.”

The dispute arose from a foreign arbitral award dated 7 January 2021, which was affirmed by the Singapore International Commercial Court on 24 December 2021.

In proceedings under Sections 47 to 49 of the Arbitration and Conciliation Act, 1996, the Madras High Court on 5 January 2023 held that the foreign award was enforceable as a decree of the Court. Following directions issued by the Supreme Court, Rs. 120 crore was paid towards the award, leaving Rs. 154,63,23,499 payable.

On 19 February 2026, the High Court ordered interim attachment of Rs. 154.63 crore from total trade receivables of Rs. 499.62 crore. It also directed a detailed audit through independent audit agency PricewaterhouseCoopers. The audit report was filed on 22 April 2026.

SEPC subsequently sought modification of the 19 February order, relying on an undertaking by Twarit Consultancy Services Private Limited to pay Rs. 7.50 crore every quarter until the award was satisfied. It sought recall of the attachment or, alternatively, that it be kept in abeyance.

It argued that the attachment had brought its business to a stage where its assets could be classified as non-performing assets. It submitted that the trade receivables had to be reinvested into projects to keep the company operational and that it incurred Rs. 2.08 crore every month towards employee salaries.

The consortium banks similarly sought “breathing space”, contending that classification as non-performing assets would benefit none of the parties. The award holders opposed the plea, arguing that it was an attempt to nullify the effect of the attachment and prolong execution.

The Court noted that despite repeated directions to disclose the source of funds for the proposed Rs. 7.50 crore quarterly payments, Twarit merely stated that it was negotiating with prospective entities for financial assistance. It further noted that a subsequent assurance to honour the entire payment also failed to identify the source of funds. It held:

“The said affidavit was wholly vague and this Court is of the considered view that the attempt made by the Judgment Debtors was only to protract the proceedings and not allowing the Award Holder to enjoy the fruits of the decree as the amount payable by the Judgment Debtors had also not been arrived at and details were not given with regard to the source.”

Further, the Bench found that SEPC and Twarit had not acted in good faith, noting that they had neither disclosed the source of the proposed Rs. 7.50 crore payment nor made any further payment. It therefore dismissed SEPC's application, with no order as to costs.

After the order was pronounced, Twarit filed an additional affidavit seeking permission to deposit Rs. 7.50 crore and proposing to settle the remaining arbitral dues by 7 October 2026.

The High Court noted that Twarit's request for quarterly instalments had already been rejected and said it could settle the dues if it secured the proposed financial facility.

Appearances for applicant (SEPC Limited): Senior Advocate P.V. Balasubramanian for Advocate A. Selvendran.

Appearances for respondents: Senior Advocate Sricharan Rangarajan for Advocate K. Gowtham Kumar for GPE (India) Ltd., GPE (JVI) Ltd. and Gaja Trustee Company Private Limited; Advocate N.P. Vijaykumar for Twarit Consultancy Services Private Limited; Advocate V.V. Sivakumar for Axis Bank Limited; Advocate Varun Srinivasan for Punjab National Bank and for the concerned consortium banks in the execution petition.