HC Quashes Sale of Park Hyatt in Goa to ITC
Court has also allowed the Hyatt’s original owner, Blue Coast, to retain physical possession of the property
Divya Sathyanarayanan & Maulik Vyas
Mumbai: The Bombay High Court has quashed the sale of luxury property Park Hyatt in Goa to ITC by lender Industrial Financial Corporation of India. Earlier, Kolkata-based tobacco-to-hotel conglomerate emerged as the highest bidder of the property in February last year from the IFCI for .₹ 515 crore.
However, the auction was challenged by it’s original owner Blue Coast Hotels, with the argument that the price quoted by the top bidder ITC was not even half the marquee property’s value. The New Delhi-headquartered Blue Coast Hotels has said in a filing to exchange that, “The court has quashed and set aside the order of the DRAT and order of the (DM – South Goa) and it has also cancelled the sale certificates issued to the auction purchaser by the secured lender in respect of hotel property “Park Hyatt Goa Resort & Spa” under SARFAESI Act 2002,”.
However, the division bench of the Bombay High Court, comprising Justice Anoop Mohta and Justice AA Sayed, has given six weeks time to ITC and IFCI from the date of passing of an order to challenge it further in the Supreme Court. The court had pronounced the order on March 23.
In the over 165 pages voluminous order, the court has also allowed the Blue Coast to retain physical possession of the property and has entitled ITC to get the refund of the amounts paid to IFCI.
The 250-room hotel in Goa — the first Park Hyatt in India — stands on about 45 acres with a built up area of 25,812 sq meters.
ITC Hotels did not wish to offer any comments for the story. An email query sent to IFCI did not elicit any response. A spokesperson for Blue Coast Hotels could not be reached despite repeated texts and calls. Blue Coast had mortgaged the property with IFCI against loan taken for its expansion programmes. However, the lender put it on sale after the company defaulted on loan payments. Blue Coast had protested the sale of Park Hyatt Goa stating that the actual value of the property was around .₹ 1,250 crore and that there was some kind of collusion between lender and ITC. The same is noted by the Bombay High Court in its judgement.
“The inference of collusion between IFCI and ITC cannot be ruled out, particularly when the other bidders may not have come forward as there was no physical possession being handed over at the time of the sale. It resulted in the property not fetching its potential market purchase price and ITC was the sole bidder who bid only .₹ 1,000/ more than the reserved price,” said the order.
Blue Coast also alleged that the loan amount was recalled prematurely by IFCI and was against the loan agreement signed between the two parties.
IFCI had taken possession of the property under the Sarfaesi Act in June 2013 after the Blue Coast hotels defaulted on loan payments. Blue Coast Hotels, a listed firm promoted by Sushil Suri of Morepen Labs, had taken debt from IFCI to build other hotels that includes the MGM Grand Delhi and Sheraton Hotel in Chandigarh and Amritsar. The company had mortgaged the Park Hyatt Goa to take the loan.
ON BIDDERS The inference of collusion between IFCI and ITC cannot be ruled out, particularly when the other bidders may not have come forward as there was no physical possession being handed over at the time of the sale HC’SORDER