Jun 6, 2012 - Times of India
NAGPUR: The Hotel Chidambara Internationalat Ramdaspeth (earlier Royal Palace), is once gain under the hammer. This was one of first properties of a bank defaulter that was auctioned in 2002 by evoking the stringent Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act that came into effect the same year.
As bad loans in banking sector had become a burning issue those days. Government enacted this law which empowered banks to go-ahead with seizure and sale of defaulters' assets. Those days every auction by a bank evoking this law including that of this hotel created a hype sending signals to wilful defaulters.
A decade later, Raipur-based businessman Balkrishna Agrawal who had purchased this hotel and rechristened it Chidambara International, is now a bank defaulter himself. He was known to be close to former chief minister of Chhattisgarh Ajit Jogi. They eventually fell apart with Agrawal joining Bahujan Samaj Party (BSP). Sources hint at political vendetta as a cause of his downfall.
In 2002, the original owner Rajkumar Khattar had mortgaged the hotel to Shikshak Sahakari Bank, which used the SARFAESI Act to recover its dues. The bank realized Rs 4.32 crore by selling the hotel that it claimed to be one its major achievements. Now when auctions under this law have become routine, Punjab National Bank (PNB), to which Agrawal owes over Rs 20 crore has invited bids for the property.
The bank has fixed a reserve price of Rs 12 crore—a three fold increase in a decade. This is not the first time PNB is trying to sell the property. The earlier three attempts to invite bids failed as no buyer turned up. Under the current auction, bids will be opened on June 27.
The hotel is located on a 8,000 square feet plot and has a built up area of 30,000 square feet. Realty players have mixed opinion about its value. Deepak Heda, a real estate advisor, said the locality has a market rate of Rs 15,000 a square foot and with the structure the hotel could easily fetch up to Rs 25 crore. Pankaj Roshan, a broker, said a reserve price of Rs 16 crore could have been set considering the market rates. However, the property may not be finding takers due to several hidden liabilities.
Agrawal was granted a loan by Kingsway branch of PNB for taking over a fertilizer factory at Raipur. However, the Chhattisgarh government cancelled the lease of the land where it was located. The business had to be shut down, leading to the default by 2007. The hotel is a part of the extended collateral security offered to the bank.
Agrawal, who is reportedly not responding to the bank's calls, could not be contacted. His brother Santosh Agrawal said they had purchased M/s Dharamdasji Morarji Chemicals and Fertilisers, a concern that ran on a land leased by Chhattisgarh government. "Although 50 years of the tenure remained, the lease was abruptly cancelled and the business came to a standstill," he said. The firm also has around 15 acres of freehold land near Raipur which could also be disposed of by the bank. However, most of it has been encroached upon and the government has failed to react despite FIRs, he claimed.
As bad loans in banking sector had become a burning issue those days. Government enacted this law which empowered banks to go-ahead with seizure and sale of defaulters' assets. Those days every auction by a bank evoking this law including that of this hotel created a hype sending signals to wilful defaulters.
A decade later, Raipur-based businessman Balkrishna Agrawal who had purchased this hotel and rechristened it Chidambara International, is now a bank defaulter himself. He was known to be close to former chief minister of Chhattisgarh Ajit Jogi. They eventually fell apart with Agrawal joining Bahujan Samaj Party (BSP). Sources hint at political vendetta as a cause of his downfall.
In 2002, the original owner Rajkumar Khattar had mortgaged the hotel to Shikshak Sahakari Bank, which used the SARFAESI Act to recover its dues. The bank realized Rs 4.32 crore by selling the hotel that it claimed to be one its major achievements. Now when auctions under this law have become routine, Punjab National Bank (PNB), to which Agrawal owes over Rs 20 crore has invited bids for the property.
The bank has fixed a reserve price of Rs 12 crore—a three fold increase in a decade. This is not the first time PNB is trying to sell the property. The earlier three attempts to invite bids failed as no buyer turned up. Under the current auction, bids will be opened on June 27.
The hotel is located on a 8,000 square feet plot and has a built up area of 30,000 square feet. Realty players have mixed opinion about its value. Deepak Heda, a real estate advisor, said the locality has a market rate of Rs 15,000 a square foot and with the structure the hotel could easily fetch up to Rs 25 crore. Pankaj Roshan, a broker, said a reserve price of Rs 16 crore could have been set considering the market rates. However, the property may not be finding takers due to several hidden liabilities.
Agrawal was granted a loan by Kingsway branch of PNB for taking over a fertilizer factory at Raipur. However, the Chhattisgarh government cancelled the lease of the land where it was located. The business had to be shut down, leading to the default by 2007. The hotel is a part of the extended collateral security offered to the bank.
Agrawal, who is reportedly not responding to the bank's calls, could not be contacted. His brother Santosh Agrawal said they had purchased M/s Dharamdasji Morarji Chemicals and Fertilisers, a concern that ran on a land leased by Chhattisgarh government. "Although 50 years of the tenure remained, the lease was abruptly cancelled and the business came to a standstill," he said. The firm also has around 15 acres of freehold land near Raipur which could also be disposed of by the bank. However, most of it has been encroached upon and the government has failed to react despite FIRs, he claimed.
