Piramal Capital Secures Creditor Status in Radius Project's 5.4-Acre Mumbai Land Parcel
The National Company Law Tribunal (NCLT) has ruled in favor of Piramal Capital & Housing Finance, affirming the legality of the charge held on Radius Estate Projects' 5.4-acre land parcel in Mumbai.
Piramal CapitalRadius Estate ProjectsMumbaiReal EstateNcltFinancial CreditorCreditor RightsMortgageLoansDebt RecoveryReal Estate MumbaiAug 08, 2024
This order resolves a contentious dispute between the creditors, including J.C. Flowers Asset Reconstruction and Piramal Capital and Housing Finance, providing much-needed clarity on the financial obligations associated with the project Avenue 54.
Radius Estate Projects, formerly Vishwaroop Realtors, had initially secured loans from financial institutions. These loans, totaling Rs 700 crore, were backed by mortgages on the project's land and assets through a series of deeds and agreements.
In 2016, one of the entities of the developer executed a deed of mortgage in favor of IDBI Trusteeship to secure a term loan from Yes Bank, which was later transferred to J.C. Flowers Asset Reconstruction. Additional loans were sanctioned, taking the total amount to Rs 700 crore, and further charges were created on the property.
By 2018, Diwan Housing Finance Limited (DHFL), which was subsequently acquired by Piramal Capital & Housing Finance, sanctioned a project loan of Rs 1,100 crore and an additional Rs 900 crore, totaling Rs 2,000 crore to the developer's arm Sumer Radius Reality.
The dispute arose when Sumer Radius Realty and other joint developing entities defaulted on its loan repayments. Despite this, a mortgage over the Avenue 54 project was created in favor of DHFL without obtaining the required No Objection Certificate (NOC) from the initial mortgage holder, Yes Bank.
J.C. Flowers Asset Reconstruction Pvt. Ltd., representing the original creditors, argued that the subsequent charges in favor of DHFL, now Piramal, were illegal and should be invalidated. It also sought to exclude Piramal from being recognized as a financial creditor of Radius Estate Projects.
The NCLT, after a thorough review of the case, ruled in favor of Piramal Capital & Housing Finance. The tribunal recognized that while the initial NOC issued by Yes Bank was conditional and eventually revoked due to non-compliance by Sumer Radius Realty and its joint developing entities, the subsequent mortgages and financial arrangements made by DHFL/Piramal were legitimate.
The tribunal ruled that the claims made by J.C. Flowers Asset Reconstruction to invalidate these charges were unfounded.
The NCLT declared that the Avenue 54 Project is subject to the charges held by Piramal that are legally binding. This decision solidifies Piramal's position as a significant financial creditor with legitimate claims over the project's assets.
In June 2023, Piramal Capital & Housing sold Rs 3,656 crore bad loans portfolio to Omkara ARC, which included the loans to Radius Estate Project as well.
The ruling has significant implications for the stakeholders involved in the Avenue 54 Project. For Piramal Capital & Housing Finance, it secures their financial interests and reinforces their creditor rights. For Radius Estate Projects, the decision provides a clear directive on the legal standing of their financial obligations and the prioritization of creditor claims.
The ruling also underscores the importance of adhering to proper procedures in financial agreements and obtaining necessary approvals when creating charges on mortgaged properties.
Information
Piramal Capital & Housing Finance is a leading financial services company in India, offering a range of financial products and services to individuals and businesses.
Radius Estate Projects is a real estate developer based in Mumbai, with several projects across the city.
J.C. Flowers Asset Reconstruction is a leading asset reconstruction company in India, specializing in the acquisition and resolution of distressed assets.
Yes Bank is a leading private sector bank in India, offering a range of banking and financial services.
IDBI Trusteeship is a leading trustee company in India, providing trustee services to various financial institutions and companies.
DHFL is a leading housing finance company in India, offering a range of housing finance products and services.
Piramal Capital & Housing Finance is a subsidiary of Piramal Enterprises Limited, a leading business conglomerate in India. Piramal Enterprises has a diversified portfolio of businesses, including pharmaceuticals, healthcare, and financial services.
Keywords Tags Piramal Capital, Radius Estate Projects, Mumbai, Real Estate, NCLT, Financial Creditor, Creditor Rights, Mortgage, Loans, Debt Recovery
FAQs
Q What is the dispute between Piramal Capital and Radius Estate Projects?
A The dispute is related to the legality of the charge held by Piramal Capital on Radius Estate Projects' 5.4-acre land parcel in Mumbai.
Q What is the NCLT's ruling in the case?
A The NCLT has ruled in favor of Piramal Capital, affirming the legality of the charge held on Radius Estate Projects' land parcel.
Q What are the implications of the ruling for Piramal Capital?
A The ruling secures Piramal Capital's financial interests and reinforces their creditor rights.
Q What are the implications of the ruling for Radius Estate Projects?
A The decision provides a clear directive on the legal standing of their financial obligations and the prioritization of creditor claims.
Q What is the significance of the ruling for the stakeholders involved?
A The ruling underscores the importance of adhering to proper procedures in financial agreements and obtaining necessary approvals when creating charges on mortgaged properties.
Frequently Asked Questions
What is the dispute between Piramal Capital and Radius Estate Projects?
The dispute is related to the legality of the charge held by Piramal Capital on Radius Estate Projects' 5.4-acre land parcel in Mumbai.
What is the NCLT's ruling in the case?
The NCLT has ruled in favor of Piramal Capital, affirming the legality of the charge held on Radius Estate Projects' land parcel.
What are the implications of the ruling for Piramal Capital?
The ruling secures Piramal Capital's financial interests and reinforces their creditor rights.
What are the implications of the ruling for Radius Estate Projects?
The decision provides a clear directive on the legal standing of their financial obligations and the prioritization of creditor claims.
What is the significance of the ruling for the stakeholders involved?
The ruling underscores the importance of adhering to proper procedures in financial agreements and obtaining necessary approvals when creating charges on mortgaged properties.
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