Now, e-sale of DCHL promoter's property

Move follows disruption of Thursday's physical auction by Indiabulls Housing; company says determined to proceed

Indiabulls Housing Finance (IBHFL) has decided on e-auction of a residential property owned by P K Iyer, a promoter of Deccan Chronicle Holdings Ltd (DCHL), at Banjara Hills in Hyderabad. This follows disruption of the physical auction on Thursday.

Gagan Banga, managing director of IBHFL, told Business Standard the company would soon give advertisements in newspapers for the proposed e-auction, expected to take place in two to four weeks. He said it was the only option, as the physical auction was “disrupted by some musclemen who hurled abuses and threatened the prospective bidders and IBHFL officials”.

IBHFL officials, he said, made frantic calls to the local (Panjagutta) police station. No assistance was given and an official ran to the police station for help, after which two constables were sent. By that time, the miscreants had chased away the prospective purchasers and left. IBHFL’s complaint was filed only late in the night, as the lower ranks were reluctant to accept it and the senior officers were busy in security arrangements for the President’s visit.

Banga added “some false and frivolous complaint” had been filed with the police station, claiming an official of IBHFL had promised to sell the property of Iyer for Rs 6 crore. Banga said the complainant had never approached the officer whose name and number were provided in the auction notices. The earlier auction for only one of the two properties, with a reserve price of Rs 6.50 crore, was a month before and a fresh auction advertised on November 23 in respect of two properties, collectively for a reserve price of Rs 14 crore. The Sarfaesi Act on such repossession of pledged assets and their sale says a property under auction cannot be sold below the reserve price.

The reserve price for the October 31 auction of Iyer’s property being Rs 6.5 crore, it could never have been sold for less than that amount and without following the procedure prescribed by law, Banga said.

The city police had on Thursday said they had begun a probe into the disruption of the auction. They also said they’d look into a complaint filed by a prospective bidder in a related matter against two officials of IBFHL. Police also registered a case against IBFHL’s legal manager, K V Subbayya, based on a complaint filed by a person named Chalapathi. The latter alleged the IBHFL official had cheated him by reneging on a promise of selling the property at lower price.

An attempt to seek relief under the law for sick companies by the DCHL promoters had earlier failed, as the Board for Industrial and Financial Reconstruction declined to register the company as a sick one, according to an order of the BIFR registrar.

“A large number of secured creditors, including Indiabulls, Canara Bank, Kotak Mahindra bank, JM Financial, IDFC and SBI, among others, have initiated a similar action, much more than what has been stated by the company,” the order said.