Tribunal stalls IndusInd bid to auction hotel
By Praveen Chandran | 05 Aug 2002
New
Delhi: The city-based Alternative Disputes Resolution
Arbitral Tribunal (ADRAT) has stalled the attempts of
IndusInd Bank to auction the Pune-based Ram Laxman Hotel’s
(RLHL) property where the five star hotel Holiday Inn
is located. IndusInd’s move was subsequent to a dispute
over loan recovery.
RLHL officials say IndusInd Bank had earlier obtained an order from the Debt Recovery Tribunal (DRT), Pune, for initiating recovery proceedings and proclaimed for the sale and auction of the property on 7 August 2002. But the Non-resident Indians Lead Bank (NRB), which had agreed to refinance the property, challenged the order and the ADRAT issued an ad interim award injuncting the existing lenders from proceedings with the legal process.
The officials say apart from IndusInd Bank, RLHL had borrowed certain funds from Tourism Finance Corporation of India (TFCI), Industrial Finance Corporation of India (IFCI) and Central Bank of India, and entered into a lease agreement with Holiday Inn for running the hotel. RLHL, which was servicing the loans regularly, however had problems on payment of instalments in the wake of the 11 September 2001 crisis and the fall in tourist traffic.
They claim that RHAL mortgaged the property rights only to TFCI and IFCI and neither IndusInd Bank nor Central Bank had such rights. Yet, IndusInd Bank had initiated action against RLHL. RLHL, meanwhile, approached NLB for advances against fixed assets, mainly to take advantage of all the fall in interest, and resolve repayment issues with the earlier financiers. NLB agreed to finance the project and informed the erstwhile financiers.
TFCI and IFCI approved the formula and gave their consent to hand over the title deeds and other securities to NLB against the settlement of outstandings with RLHL. But IndusInd Bank chose to ignore the settlement formula and moved DRT. The ADRAT, while stalling the DRT order, had taken a serious note of the steps taken by the concerned parties as illegal, void, malicious and without jurisdiction, tainted with fraudulent motives and in abuse of legal process.