Maldives Airports Company Ltd., which last month took over the control of the Male International Airport from the GMR-led consortium, has rejected the claims of Axis Bank for recovery of its loans extended to the project.

In a letter dated December 27, 2012, a copy of which is available with The Hindu, Maldives Airports has turned down Axis Bank’s demand for payment of $163.5 million citing various clauses of the cancelled concession agreement based on which the bank had lent money to the project.

“Under Clause 3 of Direct Agreement (dated November 24, 2010), the Granter (Maldives Airports Company) has the obligation to pay to the Security Agent (Axis Bank, Singapore branch) all sums only upon an early termination occurring. Since no such early termination has occurred, you have no basis to demand payment under the Direct Agreement,” the letter signed by Ibrahim Mahfooz, Managing Director, Maldives Airports Company said.

“The concession agreement was void ab initio (to be treated as invalid at the outset) and that was the basis of the Grantor (Maldives Airports Company) taking back the airport from the project company (GMR Male International Airport Private Ltd),” the letter added.

“As a result, your request for payment of the sum of $163,596,347.78 is hereby rejected,” the letter said.

It further added, “All our rights are reserved, including (but not limited to) pursuing our case relating to the validity of the Direct Agreement itself in light of our position that the concession agreement is void.”

A top Maldives Government official, when contacted, said that he would check the facts and get back on Thursday.

The Singapore branch of Axis Bank had written a letter to Maldives Airports Company on December 21, 2012, seeking payment.

Maldives Government, through the state-owned Maldives Airports Company, took control of the airport on December 8. This was India’s biggest FDI project in Maldives and it ran into trouble since change of guard at the helm last year.

More In: Companies | Business