Federal Bank Takes Possession of the Three Star Hotel ‘The Pepper Vine’

KOCHI:
The Federal Bank Ltd has taken actual possession of a 3 star hotel named ‘The Pepper Vine’ at Thekkady owned by Daphne Hotels & Tourism (P) Ltd on 04/02/2017. The Banks action comes in the wake of The Hotel committing default in repayment of their loan liability amounting to Rs.11 Crores towards the Bank. In a similar step towards recovering it dues from loan defaulters, the Bank had taken possession of a five star hotel namely The Elephant Court, Thekkady by invoking powers under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) as they had defaulted more than Rs.25 crores to the Federal Bank, Two weeks ago on 18-01- 2017.
Daphne Hotels & Tourism (P) Ltd was sanctioned with credit facility for construction of Hotel ‘Pepper Vine’ at Thekkady and for the subsequent purchase of plant, machinery, furniture and for interior decoration of the hotel. Though the construction is completed and the hotel is fully operational, the borrowers willfully defaulted the repayment of loan liability and the loan account became Non Performing Asset (NPA) on 30/06/2015.
The repeated actions from Bank, under the provisions of SARFAESI Act, against the defaulters had gained wide-spread appreciation from various corners in the industry and it turned out to be strong message to the big corporate defaulters who unnecessarily drag the bank’s recovery actions by filing multiple litigations before various judicial forums. The bank had successfully defended several litigations at different forums to enforce its securities to protect the public money. The actions of Banks against running star hotels are unheard in Indian Banking history. The bank after obtaining order from the Chief judicial Magistrate Court, Thodupuzha had taken actual poss
ession of the hotel on 04/02/2017 with the assistance of advocate commissioner appointed by the CJM Court Thodupuzha and the local Police. Earlier during the process, on application filed by the borrower, DRT Ernakulam had ordered status Quo as on 28/12/2016 with a direction to remit Rs.3 crores. But as the company failed to remit the amount prescribed by DRT, the status quo order was vacated and the bank was allowed to proceed further under the provisions of law. The borrower company had simultaneously challenged the actions of the Bank before the Honourable High Court of Kerala by filing Writ Petition No 74/2017. As directed by the High Court in the said Writ Petitions, the Bank had not proceeded further. On 12/01/2017 the Honourable High Court disposed of the Writ Petition No. 74/2017 directing the parties to remit Rs.2.5 crores before 31/01/2017 towards the dues of the hotel Pepper Vine failing which the Bank will be allowed to take possession of hotel Pepper Vine and proceed with further legal actions for enforcement of Banks mortgage right.
The borrowers have challenged the aforesaid judgment by filin
g Writ Appeal No 214/2017 before Division Bench of the Hon’ble High Court of Kerala and the Division Bench by judgement dated 01/02/2017 disposed of the Writ Appeal allowing extension of time for making the initial remittance of Rs.2.5 Crores up to 03/02/2017. It was made clear in the judgment that, on failure of the borrower to remit the said amount of Rs.2.5 Crores on or before 03/02/2017, the Bank can very well proceed under the provisions of SARFAESI Act to take possession of the security property with the assistance of Police on 04/02/2017. The borrower did not comply with the order of the High Court. Hence in due compliance of the order of High Court, Federal Bank took actual possession of hotel Pepper Vine on 04/02/2017 with the assistance of Advocate Commissioner appointed by court.
The Bank could succeed in its actions towards taking actual possession and had successfully defended multiple litigations by the borrower for last several months which culminated in the successful recovery action which is rarely seen in the industry. The banks actions were lead by Shri. Harikrishna Pisharady, Dy. General Manager & Mohamed Sageer T A, Asst. General Manager, Head Office, along with the teams from the Recovery Department Head Office and Recovery branches.