SEPC Ltd: Court Orders Salary Funds, Allows Bank Fund Access Amid Twarit Deadline

The Madras High Court issued interim directives on April 30, 2026 (order uploaded May 5, 2026), allowing SEPC Limited to use ₹2 crore exclusively for salary payments. The court also permitted a consortium of banks to appropriate up to ₹15.69 crore from SEPC's Trust & Retention Account towards dues under the company's approved resolution plan.

Separately, Twarit Consultancy Services Pvt. Limited faces a strict deadline. It must deposit ₹2.5 crore with the High Court's Registrar General within 15 days of the order and disclose the sources of funds for its quarterly payments of ₹7.5 crore.

SEPC Limited stated that these interim measures are not expected to have a direct quantifiable financial impact. This is due to a pre-existing indemnification agreement. The company had received ₹7.14 crore in trade receivables as of April 29, 2026, against previously attached receivables totaling ₹154.00 crore.

Why This Matters:
These court orders significantly influence SEPC's financial flexibility and operational continuity. While the ₹2 crore allocation ensures critical employee payments, the bank appropriation and Twarit's compliance demands are key developments in the ongoing legal and resolution processes. The company's claim of no financial impact relies heavily on its indemnity agreement, a point stakeholders will watch closely given SEPC's past legal issues.

Background on SEPC's Challenges:
SEPC Limited, formerly Shriram EPC, has faced financial difficulties, including a resolution plan approved in March 2022. The company has been involved in lengthy legal disputes, notably concerning a Singapore arbitration award of approximately ₹195 crore plus interest. This award stemmed from a share purchase agreement for Haldia Coke and Chemicals Pvt Ltd. In February 2026, the Madras High Court had previously ordered the attachment of ₹154.63 crore in SEPC's trade receivables and appointed PriceWaterhouseCoopers (PWC) to audit its finances. Concerns about SEPC's negative operating cash flow and volatile margins have also been raised.

Operational and Financial Shifts:
The court's allowance for ₹2 crore means SEPC can continue essential salary disbursements. The banks' access to ₹15.69 crore marks a step toward recovering dues under the resolution plan, though this appropriation is contingent on the actual account balance. Twarit Consultancy's immediate obligation to deposit funds and provide disclosures carries potential legal ramifications if unmet.

Key Risks to Monitor:
A primary risk is Twarit Consultancy Services failing to meet the ₹2.5 crore deposit and fund source disclosure requirements. Such non-compliance could lead to further legal action, potentially impacting SEPC. The banks' ability to fully appropriate the ₹15.69 crore also depends on the Trust and Retention Account's balance. The underlying dispute driving the arbitration award remains an ongoing issue, with possibilities for further claims. The success of SEPC's overall resolution plan hinges on navigating these complex legal and financial situations smoothly.

Industry Context:
SEPC operates in the competitive Engineering, Procurement, and Construction (EPC) sector alongside larger firms like L&T and mid-sized competitors such as Dilip Buildcon and PNC Infratech. However, SEPC's current focus is uniquely shaped by its ongoing legal battles and debt resolution, differentiating it from peers primarily concentrated on operational growth. Companies managing complex debt restructuring and litigation often face intense scrutiny over cash flows and asset management.

What to Track Next:
Investors and stakeholders will monitor Twarit Consultancy Services' compliance with the deposit and affidavit submission deadlines. Key watch points include the next court hearing on June 23, 2026, for further judicial decisions, and disclosures on the balance and use of SEPC's Trust & Retention Account by the banks. Any further developments related to the arbitration award and the indemnity agreement with Twarit Consultancy Services will also be closely watched, as will the potential impact on SEPC's operational execution and ability to secure new projects amidst these proceedings.