Bombay High Court revokes sale of Park Hyatt Goa property to ITC

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In the month of February 2015, Kolkata based tobacco conglomerate ITC has emerged as the highest bidder at the auction of Park Hyatt Goa property by placing the bid offer of Rs. 515 crore. But the following bid was challenged by the original owners of Park Hyatt the Blue Coast Hotels with the arguments that the price quoted by the top bidder ITC was not even half the marquee property’s value.

[su_expand more_text=”READ MORE” less_text=” ” height=”0″ hide_less=”yes” link_style=”button” link_align=”center”] According to the sources, a New Delhi based Blue Coast Hotels has said in a filing to exchange that, “The court has quashed and set aside the order of the DRAT and order of the (DM – South Goa) and it has also cancelled the sale certificates issued to the auction purchaser by the secured lender in respect of hotel property “Park Hyatt Goa Resort & Spa” under SARFAESI Act 2002.”

While passing the order, the division bench of Bombay High Court comprising Justice Anoop Mohta and Justice AA Sayed has given six weeks time to ITC and IFCI from the date of passing of an order to challenge it further in the Supreme Court. The court had pronounced the order on March 23. In its over 165 pages voluminous order, the court has also allowed the Blue Coast to retain physical possession of the property and has entitled ITC to get the refund of the amounts paid to IFCI.

The Park Hyatt Goa property which is spread over the 45 acres of land with 25,812 sq meters built up area with 250 rooms is the first Park Hyatt in India. ITC Hotels did not wish to offer any comments for the story. An email query sent to IFCI did not elicit any response. A spokesperson for Blue Coast Hotels could not be reached despite repeated texts and calls.

Blue Coast had mortgaged the Park Hyatt property with IFCI against the loan taken for the renovation and expansion of the resort in Goa. However the company did not manage to honor the loan installment and the default in the loan payment prompted the lender to put the hotel for sale to which the Blue Coast had objected. According to the Blue Coast owners the cost of the property is Rs. 1,250 crore and rejected the sale price offered by the ITC. According to Blue Coast, there is some sort of confusion between lender and ITC. The same is noted by the Bombay High Court in its judgement.

“The inference of collusion between IFCI and ITC cannot be ruled out, particularly when the other bidders may not have come forward as there was no physical possession being handed over to ITC at the time of the sale. It resulted in the property not fetching its potential market purchase price and ITC was the sole bidder who bid only Rs.1000/- more than the reserved price,” said the order.

The Blue Coast also alleged that the IFCI had recalled the loan amount prematurely which is against the loan agreement signed between two parties.

According to the sources, IFCI had taken possession of the property under the SARFAESI Act in June 2013 following the Blue Coast hotels defaulted on loan payments. Blue Coast Hotels is a listed firm promoted by Sushil Suri of Morepen Labs who had taken loans from IFCI to build other hotels that includes the MGM Grand Delhi and Sheraton Hotel in Chandigarh and Amritsar. The company had mortgaged the Park Hyatt Goa property towards the security for loan.

This is not the first time that IFCI had tried to auction the Goa property, they had tried this twice earlier but could not succeed due to the low reserve price and their ongoing tussle with Blue Coast that did not allow them to complete the auction process. During an earlier auction, SBI Cap Trustee Company, which is the debenture trustee for the non-convertible debentures issued by the company for an aggregate value of Rs 100 crore, had contested IFCI’s reserve price saying it was less than the market value of the property.

Source: Economic Times

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