Housing Development Finance Corporation (HDFC) has initiated an auction of London-based Hirco-owned Hiranandani Palace Gardens’ township in Chennai under the Sarfaesi Act to recover Rs 539.86 crore dues.
The township is spread over 200 acres and built over three phases. Hiranandani Palace Gardens has another township at Panvel in Maharashtra.
HDFC plans to conduct an e-auction on March 3, 2014 with a reserve price of Rs 551 crore for the properties, the mortgage lender announced through a public notice. In the notice, HDFC said It has allowed the borrower (Hiranandani Palace Gardens) to sell residential apartments in the currently existing buildings on project land and the buyer of the Chennai properties have a “step in obligation” of completing the structures on the existing project land” according to the terms of agreement between the borrower and buyers of residential buyers.
The two townships in Chennai and Panvel were a bone of contention between the Mumbai-based Hiranandani Group and Hirco. Both the projects of Hirco have defaulted on their payments to their lenders.
Hirco was floated by Hiranandanis in 2006 and it acted as the family's investment vehicle in Indian projects.
However, the promoters exited the board with Hiranandani family patriarch Niranjan and his daughter Priya stepping down as chairman and CEO of the company, respectively, in 2010.
Last year, Hirco sued Niranjan and Priya alleging they had committed fraud and other misconduct prior to their resignation. It also sought damages to the tune of £220 million. Hirco’s contention was that it received neither interest nor dividends from its investments and payments towards the purchase of units were not passed to it.
Recently, Hirco threatened action against the Hiranandanis if the latter did not explain to whom the cash collections from the townships were being disbursed and why the companies were unable to repay their debts.
On December 24, 2013, the Bombay High Court appointed a court receiver to manage the Chennai property after Hiranandani Palace Gardens defaulted on a loan of Rs 76 crore to Tata Capital.
When contacted , a Hiranandani Palace Gardens spokesperson said: “This is a rebid by HDFC. As stated earlier, Niranjan Hiranandani has been disassociated with Hirco for the last three years and it is sad to see world-class locations with world-class construction go this way. Since the overseas investors have refused to recapitalise the project companies with capital needed, the bank needed to take this action to protect the Indian consumers and the Indian banks. We are now working to assist the flat purchasers of the project.”