MUMBAI: In a blow to one of the biggest names in the real estate indutry, the Bombay high court has appointed a court receiver to manage the property of Hirco Plc's subsidiary Hiranandani Palace Gardens (HPG) in Chennai. The court passed the order on December 24 while hearing an arbitration plea filed by Tata Capital Financial Services Ltd (TCFSL) after HPG defaulted on a loan of 76 crore.
While restraining HPG from creating third-party rights, the court directed the developer to file an affidavit, disclosing its unencumbered assets within three weeks. Niranjan Hiranandani, managing director of Hiranandani Constructions, and Vikram Trivedi of law firm Manilal Kher Ambalal & Co, which represents TCFSL, refused to comment, saying they still have to study the court's order.
Earlier in a statement, Hirco, which comprises majority foreign investors, reiterated that it had no involvement in borrowing this money from various banks, including TCFSL, and had no control or involvement in any of the affairs of HPG. "Hirco Plc had no involvement in the development of the Panvel and Chennai projects or the sale or collection of money from people, who purchased units in these developments. These activities were carried out by Hiranandani-controlled entities," said the statement, which was sent to the London Stock Exchange.
The statement further said it had initiated legal proceedings against Hiranandani and his daughter Priya Hiranandani-Vandrevala for fraud. "Hirco Plc has no physical presence in India. It was created in 2006 to invest in FDI-compliant Indian real estate development to be sourced by Niranjan, his wife Kamal and entities controlled by them. Money was used to purchase land, which is now controlled by Hiranandani-owned entities," the statement said.
A few months ago, TCFSL had filed a winding-up petition demanding liquidation of HPG, which is developing large mixed-use townships in suburban areas in tier-1 and tier-II cities in India, including Chennai and Panvel. In its petition, TCFSL said the developer defaulted on loan obligations from December 2012 and is now liable to pay 82.6 crore, including an annual interest of 18.5%. It said HPG had applied for a 100 crore term loan that was sanctioned in July 2011. Of this, Tata Capital had disbursed 76 crore. The petition said HPG is under financial stress and is unable to meet creditor's liabilities. It claimed the company misrepresented facts while availing the loan.