Callidus Capital accuses Deepak International of abusing court process

A lawsuit between a Bay Street financing firm and Deepak International, the company to whom the Northwest Territories government sold two diamond cutting and polishing plants, is turning nasty.

In court documents, Callidus Capital Corporation uses phrases such as "scandalous," "frivolous" and "an abuse of the court process" to describe Deepak's response to the lawsuit.

In 2013 the N.W.T. government announced it had sold two abandoned diamond cutting plants near the Yellowknife airport to Deepak International for $1.8 million. The government said the deal signalled a rebirth of the city's diamond cutting and polishing industry.

Deepak paid for the plants a year and a half later, after Callidus agreed to lend it up to $20 million to buy the plants and get them up and running.

In December, Callidus filed a $5.9 million lawsuit against Deepak International, Deepak Developments, owner Deepak Kumar and his wife. It was supported by hundreds of pages of affidavits, legal arguments, photos and copies of signed loan agreements.

Kumar responded with a two-page statement of defence. In it, he denies owing Callidus anything and says the Northwest Territories court has no jurisdiction to hear the lawsuit;that it should have been filed in Alberta.

Earlier this month, Callidus served notice it will now ask the judge to dismiss Deepak'sstatement of defence, arguing it doesn't meet the legal requirements of a statement of defence.

Callidus is also asking the N.W.T. court to affirm it has jurisdiction to hear the lawsuit and to award it the $5.9 million it's suing for.

That argument is scheduled to be heard in Yellowknife on April 20.

The photos Callidus included inits statement of claim depict the opening of steel shipping containers near the plants. Callidus says Kumar claimed the containers held $18 million in high-tech diamond cutting machines. The machines were to be security for the loan. But when Callidus opened the containers, it found they held nothing but old office furniture and equipment.

The diamond cutting plants are now in the control of a court-appointed receiver,theBowraGroup. Callidus is still trying to locate the missing diamond cutting machinery.

The Bowra Grouprefused to say when the plants may be put on the market.