No bidders as yet for Kingfisher House, but e-auctions not easy
Buyers, too, need to do their due-diligence before participating in e-auctions
The e-auction by State Bank of India of Vijay Mallya’s Kingfisher House, the headquarters of the defunct Kingfisher Airlines, turned out to be a damp squib with no bidders. However, e-auctions are not easy and require days of planning. Buyers too need to do their due-diligence before participating in such bids and not be lured by the temptation to strike bargains.
Located near the domestic airport at Mumbai’s Vile Parle area, Kingfisher House is spread across a built- up area of over 17,000 sq ft. The base price of the multistorey property was set at ₹ 150 crore and it was being auctioned by SBICAPS Trustee, a subsidiary of SBI Caps conducted on the e-auction property platform by AuctionTiger.
Prospective buyers will now be able to bid for the commercial property till April 4. The actual auction will be held on April 6, reports said.
But i s t he valuation of ₹ 150 crore property correct? According to Sanjay Dutt, managing director, India, Cushman & Wakefield, the price is fair but the first attempt at auctioning was not successful because there was no sufficient information available about the property. Nor was it marketed well. The fact is that it is a unique property and has retail and signage potential. Automobile companies, banks, airlines can consider it as it is a standalone property in the area. It also offers scope for further construction.
SBI had initiated the auction to recover ₹ 7,000 crore owed by Mallya – declared wilful defaulter – to a consortium of 17 banks. The auction on Thrusday, March 17, was conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. As per the public notice for e- auction, Kingfisher House also comes with an outstanding property tax of ₹ 67 lakh which is yet to be paid. While this was an e-auction for a commercial property, banks also e-auction residential properties from time to time. People bidding for such properties should ensure they do not get stuck with unclear legal titles.
When do banks e- auction properties? If the borrower fails to honour a loan, banks start the legal process and repossess the property and later sell it through e-auctions. Usually if the borrower defaults on his loan for six continuous months, he is given a 60- day notice period. Banks can then issue another 30-day notice period and in case the money’s still not repaid the loan is declared part of the bank’s non- performing asset (NPA).