The Hindu Business Line : IndusInd bid to auction hotel property stalled

THE Alternative Disputes Resolution (ADR) Arbitral Tribunal, New Delhi, has stalled IndusInd Bank's bid to auction the Pune-based Ram Laxman Hotels' property, where the five-star Holiday Inn is located, following a dispute over loan recovery.

According to an official communication, the bank had earlier obtained an order from the Debt Recovery Tribunal, Pune, for initiating recovery proceedings and proclaimed for sale/auction of the property on August 7.

NRI Lead Bank (NLB), which had agreed to refinance the property, had challenged the order and the ADR Tribunal has issued an ad interim award injuncting the existing lenders from proceeding with the legal process.

It may be noted that apart from IndusInd Bank, Ram Laxman Hotels Ltd (RLHL) had also borrowed some funds from Tourism Finance Corporation of India Ltd (TFCI), Industrial Finance Corporation of India (IFCI) and the Central Bank of India and had entered into a lease agreement with Holiday Inn for running the hotel.

Though RLHL had been repaying the amount, there were certain problems in the payment of instalments. This, according to the release, is due to the September 11 attacks and the subsequent fall in tourist traffic.

The release noted that RLHL had mortgaged the property rights to only TFCI and IFCI and neither IndusInd Bank nor the Central Bank of India had any such right.

Meanwhile, RLHL had approached NLB for advance against fixed assets. While TFCI and IFCI had approved the formula and given their consent to the handing over of the title deeds and other securities to NLB against the settlement of outstandings with RLHL, IndusInd Bank chose to ignore the settlement formula and had moved the DRT, it added.

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