The Madras High Court on Monday refused to quash, or even stay, an order passed by the Directorate of Enforcement on February 13 provisionally attaching 10.46 acres of land on which real estate firm VGN Developers is constructing a high-rise to house around 1,000 flats under the brand name VGN Fairmont at Guindy here.
Justice K. Ravichandrabaabu held that he was not inclined to entertain a writ petition filed by the real estate firm, represented by its Managing Director V. Pratish Devadoss, since the property had been attached only provisionally and the firm could seek remedy from the adjudicating authority under the Prevention of Money Laundering Act of 2002. The judge disposed of the case with liberty to the petitioner firm to approach the adjudicating authority, though Mr. Devadoss, in his affidavit, claimed that the remedy before the statutory authority would not be efficacious since the firm was losing more than ₹ 5 crore every day by way of interest for the money it had borrowed for the project.
Pointing out that the land was purchased for ₹272 crore and a 10-storey building constructed on the property after making substantial investments, the Managing Director said that so far 650 people purchased flats and they were in “grave agitation” as the project had come to a halt.
Case history
Explaining the history of the case, he claimed the property originally belonged to Hindustan Teleprinters, a public sector undertaking which borrowed from a consortium of banks led by State Bank of India. The banks initiated debt recovery proceedings for a total liability of ₹116.14 crore. Though several efforts were taken from 2011 to 2013 to get the property sold for a consideration between ₹209.54 to 250 crore, they did not fructify. Hence, VGN offered to purchase it through a private treaty as provided in rules framed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act of 2002.
Claiming that VGN Developers had agreed to pay ₹272 crore, which was much more than the reserve price of ₹ 250 crore, the petitioner said that the CBI, which was probing into the entire transaction, had come to a conclusion that SBI had suffered a loss of only ₹53.50 crore and that too because of waiver of interest to HTL.
