News Stocks Dharani Sugars and Chemicals Limited Receives Legal Notice from NARCL for Master Restructuring Agreement Non-ComplianceDharani Sugars and Chemicals Limited Receives Legal Notice from NARCL for Master Restructuring Agreement Non-Compliance
Dharani Sugars and Chemicals Limited received a legal notice from NARCL on 7th February 2026 for non-compliance of Master Restructuring Agreement dated 24th May 2024. The notice identifies multiple defaults including failure to allot 20% equity shares to NARCL, non-creation of INR 15 crores DSRA, and financial default of INR 10.48 crores due on 31st December 2025. NARCL has granted one month to cure all defaults, failing which recovery proceedings will be initiated before the Debt Recovery Tribunal.
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Dharani Sugars and Chemicals Limited has received a legal notice from National Asset Reconstruction Company Limited (NARCL) regarding multiple non-compliances under the Master Restructuring Agreement (MRA) dated 24th May 2024. The company disclosed this development to stock exchanges on 10th February 2026 under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Legal Notice Details
The legal notice dated 7th February 2026 was issued by NARCL through its authorized representative India Debt Resolution Company Limited (IDRCL). The notice pertains to the Sanction Letter dated 22nd March 2024 and the Master Restructuring Agreement executed among NARCL, Dharani Sugars and Chemicals Limited, and guarantors Dr. Palani G. Periyasamy and Smt. Visalakshi Periyasamy.
The restructuring terms were submitted before the Debt Recovery Tribunal, Chennai, and form part of binding compromise proceedings in the following cases:
| Case Details | Forum | Date |
|---|---|---|
| India Bank Vs Dharani Sugars (OA No.368 of 2020) | DRT-I, Chennai | 02-Jul-2024 |
| Bank of India Vs Dharani Sugars (TA No. 1481 of 2023) | DRT-III, Chennai | 12-Aug-2024 |
Multiple Events of Default Identified
NARCL has identified several material non-compliances and events of default under the MRA through previous notices dated 24th November 2025 and 19th December 2025. The key defaults include:
- Equity Allotment Failure: Non-allotment of fully paid-up equity shares aggregating to 20% of total paid-up equity share capital in favor of NARCL as required under Clause 4(c) of the MRA
- DSRA Non-Creation: Failure to create, fund, and maintain a Debt Service Reserve Account of INR 15 crores within 18 months from the Cut-off Date
- Monitoring Committee: Failure to constitute and operationalize the Monitoring Committee as required under Clause 11(i) of the MRA
- Farmers' Dues Corpus: Non-arrangement of requisite additional corpus for payment of farmers' dues
- Unauthorized Debt: Incurrence of additional indebtedness of approximately INR 25 crores without prior written consent from NARCL
Financial Default and Outstanding Amount
In addition to the operational defaults, NARCL has highlighted a separate financial default. An amount of INR 10.48 crores, which fell due and payable on 31st December 2025 according to the agreed repayment schedule under the MRA, remains unpaid and outstanding.
| Default Type | Amount | Due Date | Status |
|---|---|---|---|
| Financial Default | INR 10.48 crores | 31st December 2025 | Outstanding |
| Additional Debt (Unauthorized) | INR 25 crores | - | Breach of Covenant |
| DSRA Requirement | INR 15 crores | Within 18 months | Not Created |
Final Opportunity and Consequences
NARCL has granted Dharani Sugars a final period of one month from receipt of the notice to cure all subsisting events of default and achieve compliance with the MRA. The company has been put on notice that failure to remedy the defaults within the stipulated period will result in:
- Initiation of proceedings before the Debt Recovery Tribunal for issuance of Recovery Certificate
- Reinstatement of entire outstanding dues in accordance with MRA provisions
- Exercise of all contractual and statutory rights available to NARCL
The notice emphasizes that no waiver, extension, indulgence, or forbearance has been granted by NARCL regarding the identified defaults, and all rights and remedies available under law and contract are expressly reserved. The company's previous responses dated 4th December 2025 and 31st December 2025 have been deemed insufficient to demonstrate cure of the identified breaches.
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