Mumbai: A London court has ruled in favour of IDBI Bank, directing a firm linked to former Aircel promoter Chinnakannan Sivasankaran to pay $143.7 million (about ₹1,250 crore) towards principal and interest on a defaulted loan.The dispute stems from a $67 million loan taken in 2014 by Axcel Sunshine Ltd, a British Virgin Islands-based subsidiary of Siva Industries and Holdings Ltd. Siva Industries had provided a letter of comfort for the loan, which was issued by the now-defunct Dubai International Financial Centre branch of IDBI Bank.Sivasankaran is the promoter of the Siva Group, of which Siva Industries is a part. Axcel is a subsidiary of Siva Industries.Read this | Supreme Court could reshape arbitration. Businesses are watching.As part of the loan agreement, Axcel pledged shares of Tata Teleservices Ltd (TTSL) as collateral, valued at ₹106 per share, to secure an $86 million loan from IDBI Bank. However, after Axcel defaulted, Siva Industries refused to honour the loan, arguing that a letter of comfort does not impose liability in the same way a corporate guarantee does.In an order dated 27 February, the England and Wales High Court rejected this argument, with judge Lionel Persey KC ruling that the letter of comfort imposed explicit legal obligations, effectively serving as both a guarantee and an indemnity.Representing itself in court, Siva Industries had claimed that IDBI Bank had only required the letter of comfort as a procedural formality to internally justify offloading a distressed loan. The court rejected this defence, upholding IDBI Bank’s claim.While IDBI Bank has won the case in the UK, recovering the dues in India involves legal hurdles.Legal experts explain that foreign judgments must be filed in an Indian court for verification and compliance with Indian legal standards. However, since the UK is a reciprocating territory, the judgment from the high court of England and Wales is enforceable in India, said Tushar Kumar, an advocate at the Supreme Court of India.Read this | Religare takeover battle: Courts must trust regulators’ wisdomThat said, enforcement could be delayed if Siva Industries appeals on grounds such as fraud, jurisdictional issues, or violation of natural justice. “Despite these hurdles, Indian courts generally uphold foreign commercial judgments, especially when based on clear contractual obligations, such as the legally binding letter of comfort found by the UK court,” Kumar said.The recovery process could be complicated if both Axcel Sunshine and Siva Industries are undergoing insolvency.“IDBI Bank’s recovery options depend on insolvency proceedings. It can file a claim with the resolution professional and await distribution based on priority. If the company goes into liquidation, IDBI will receive payments only if assets remain after secured creditors are paid,” said Kumar.If Siva Industries is found to have diverted assets to evade repayment, IDBI Bank could challenge fraudulent transactio