High Court stays taking over of Hotel Holiday Inn

Saurabh Malik

Tribune News Service

Chandigarh, June 17

Issuing a notice of motion for August 19 to the Panchkula District Magistrate and two nationalised banks, a vacation Bench of the Punjab and Haryana High Court today stayed the taking over of Hotel Holiday Inn.

The Bench made it clear that the order was subject to deposition of Rs 75 lakh by June 22. The petitioner was also asked to re-negotiate with the banks. The development before the Bench of Justice M Jeyapaul and Justice Amit Rawal is significant as the five-star hotel in Sector 3, Panchkula, was to be set up at a cost of Rs 130.29 crore by Walia Traders Limited.

The petitioner, through senior advocate Anand Chhibbar, told the court that the respondent-banks had initially agreed to finance the project at 9.75 per cent per annum interest. However, the banks raised it to 16.50 per cent per annum, which “caused great prejudice” to the petitioner. The hotel was formerly functioning as Hotel KC Royal Park.

Chhibbar added that the move lead to excess charging of interest of Rs 40.59 crore, including Rs 33.81 crore by the PNB and Rs 6.78 crore by the OBC.

The petitioner filed a securitisation application in the Debts Recovery Tribunal-I against the respondents. However, the same was pending adjudication. No direction was given by the tribunal to the respondent-banks to consider their case for corporate debt restructuring in the light of the RBI guidelines.

Chhibbar added that the petitioner submitted a proposal for restructuring the loans to a respondent-bank in March, providing therein detailed projections and other relevant data for restructuring the loans. The proposal was rejected without application of mind and “devoid of cannons of financial propriety”.

The court was also told that the respondent-banks had twice put the property on sale by auction each time at reduced rate. However, no buyer had come forward because of continued depressed market conditions.

Now, the respondent-banks got a notice issued in newspapers through the Panchkula Tehsildar for the payment of the entire amount with interest by June 19, failing which the physical possession of the hotel would be taken.

“In case the physical possession of the unit is taken over, the respondents will never restructure the account and may sell it at a throwaway price. There is a threat of physically taking over of the hotel and if it is so done, chances of debt restructuring will simply lapse,” Chhibbar contended.