Published On : Fri, Feb 12th, 2016

High Court stays auction of First City project

Nagpur: Nagpur bench of Bombay High Court on Thursday stayed the proposed auction of First City Housing Project of Multimodal International Hub Airport at Nagpur (MIHAN) and Special Economic Zone (SEZ) by Vijaya Bank for recovery of Rs 234.50 crore from Chourangi Builders and Developers formerly known as Reatox Builders and Developers Private Limited. A division bench consisting Justice Bhushan Gavai and Justice Pradeep Deshmukh while hearing a petition filed by First City Flat Owners Association issued notice to MADC, Vijaya Bank and Chourangi Developers and stayed the proposed auction.

The respondents have been directed to file reply within two weeks. According to the petitioner association, the proposed auction move of Vijaya Bank was against the interests of flat purchased who would be put to irreparable loss.

Vijaya Bank had tri partites agreement with every flat owner and on the basis of NoC issued by the bank, consumers availed bank fmance from other institutions. The scheme was to be completed by 2012, but till date flats were not completed, and they are repaying loan and interest amount.

The association also challenged seizure of MADC land and decision to auction the same to recover the loan amount of builder by jeopardising their interests.

According to First City Flat Owners Association, Reatox Builders had sold around 550 units of the project and completed around 40 per cent work. The project had plans to construct 1500 flats in 11 towers of 13 floors each using Malaysian technology.Vijaya Bank had published an auction sale notice on its website regarding auction of the buildings on February 16 between 11 am to 1.30 pm.

The company obtained loan from the Vijaya Bank for construction of building on sprawling 31 acres of land at Khapri village having survey number 9, 10, 12, 13, 14, 20, 21, 22, 23, 24, 25, 40, 47 and 50. The land co mprising 11.644 acres with constructions situated in the village lampri (Rly) in Hingna PS has also been seized by the bank for loan default payment.

The bank has finalised reserve price of Rs 299 crore for the auction of entire piece of land. According to petitioner Mumbai based Reatox Builders and Private Limited inked an agreement with Maharashtra Airport Development Company (MADC) for construction of flats for people working in the SEZ area in 2008. Due to legal tangles, the project could not be com-pleted and Vijaya Bank, which had financed the project, seized the buildings and decided to auction entire mortgaged property.

The bank has published auction notice for recovery of Rs 234.50 crore. MADC is corporate guarantor of the project. Though there was reports of finalisation of one time settlement with builder who agreed to pay Rs 120 crore in one go to Vijaya Bank, the auction pro cess was not stayed and hence the petitioner association moved the High Court. Adv Firdos Mirza appeared for the petitioner association.