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Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai


Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

Last updated: October 26 2019
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  • #11


    Re : Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

    Under-construction Palais Royale to be auctioned to pay Indiabulls loans

    Palais Royale, the jinxed under-construction skyscraper at Worli Naka, will be auctioned as its developer, Shree Ram Urban Infrastructure (SRUI), has failed to pay back loans to Indiabulls Housing Finance.

    The lender said it has to recover Rs 971 crore from SRUI and its guarantor, Vikas Kasliwal. Property market sources said a few developers have evinced interest in taking over the tower, touted as the tallest residential—albeit unfinished—building in India at 294 metres.

    When TOI asked him to comment on the issue, Kasliwal texted: “Matter is sub judice.”

    The ill-fated tower, where luxury flats were sold for Rs 15 crore to more than Rs 50 crore each, has been embroiled in litigation over massive illegal construction and misuse of the floor space index (FSI). A Supreme Court verdict on the violations is awaited soon.

    782cr reserve price set for 7-acre property

    On Saturday, Indiabulls issued a sale notice for Palais Royale under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). The housing finance company has set a reserve price of Rs 782 crore for the 28,409-square-metre or over 7-acre property.

    The Indiabulls notice for sale comes on the heels of a Bombay high court order, which allowed handover of the property to the lender. “Provisional liquidator is directed to forthwith hand over possession of the mortgaged property to the applicant (Indiabulls). However, the applicant shall conduct the sale of the property in consultation with the official liquidator...,’’ said Justice S J Kathawalla in his order, uploaded recently.

    The housing finance company had sanctioned an aggregate loan of Rs 915 crore under seven separate loan agreements to SRUI.

    In August 2015, a company petition was filed before the court, seeking to wind up the developer’s firm. In October 2016, an official liquidator was appointed. Indiabulls then initiated proceedings against the developer for recovery of its loans. On November 1, 2017, Indiabulls filed an application against the company under the Insolvency and Bankruptcy Code before the National Company Law Tribunal in its capacity as a “financial creditor” to initiate the corporate insolvency resolution process.

    In the high court, the builder’s lawyer submitted that Palais Royale’s construction had been subjected to various litigations before it as well as the Supreme Court. Construction had been stayed and the issues pending before the apex court were related to the mortgaged property. SRUI’s advocate further said the applicant (Indiabulls) had come to the court with “unclean hands” as it was seeking possession of property far in excess of that mortgaged in its favour. Justice Kathawalla did not accept this argument, stating that Indiabulls is not a party before the apex court. “I further understand that there are no orders passed by the apex court prohibiting the transfer sought by the applicant,” said the judge.

    Earlier, TOI had reported that Rs 1,350 crore paid by high net worth individuals, who had booked flats in the project, has been stuck for a decade. Aggrieved purchasers, who formed Palais Royale Members’ Association, have already paid 20% to 100% for their homes, each measuring between 4,000 sq ft and 8,000 sq ft. Some of the larger flats were sold for over Rs 50 crore each. Of the 162 apartments, 77 have been booked since 2009.

    In 2016, municipal commissioner Ajoy Mehta ordered the developer to seal or rupture four fire refuge floors and large refuge areas outside each flat to avoid misuse. Mehta, in his report prepared following a high court directive, also ordered that refuge areas outside each flat in the 56-storeyed tower be blocked.

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    Last edited May 6 2019, 04:35 AM.


    • #12


      Re : Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

      How India’s tallest building ended as an unfinished construction site

      Bets on expensive property go bad in downturn, scaring off buyers and choking credit

      The unfinished tower Palais Royale, background, is being auctioned off as unsold housing inventory in Mumbai has risen sharply in the first half of 2019 © Bloomberg
      July 14, 2019 8:00 pm by Benjamin Parkin in Mumbai
      It was meant to be the tallest building in India, with luxury flats, a swimming pool and cinema where billionaires and Bollywood stars could enjoy a life of perfect splendour looking down over the Mumbai skyline.

      But the Palais Royale complex now sits unfinished alongside other partially built structures tangled in the megacity’s traffic-choked downtown streets, an apt symbol of a crisis that threatens a key part of India’s financial system.

      Over the past decade, some of India’s largest financial groups have bet big that the country’s fast-growing economy would breed a generation of rich bankers, lawyers and tech entrepreneurs eager to spend millions of dollars on luxury flats in the country’s largest cities.

      A group of gutsy shadow banks willing to fund such projects were rewarded with roaring growth. These non-bank financial companies, like Palais Royale’s financier Indiabulls Housing Finance and other large groups like Dewan Housing Finance, soon became a big part of India’s financial system. Shadow banks grew to account for a fifth of all new credit last year, and became the largest source of funding for real estate thanks to loan growth of more than 20 per cent a year between 2013 and 2018.
      But those bets on expensive property have now gone bad in an economic downturn, scaring off buyers and choking the flow of credit. That has left the real estate sector with a formidable mound of debt: developers collectively owe about Rs2.5tn ($37bn) to the non-bank financial sector.

      “If the big players fail to get money,” said Sachchidanand Shukla, chief economist of the Mahindra Group conglomerate, “it can quickly have a domino effect. And that is the real scare.”

      Property consultancy Anarock estimates that half of the luxury real estate in Mumbai’s downtown alone is unsold: 11,000 properties worth a total Rs590bn.

      Analysts say these billions of dollars stuck in illiquid luxury property now present a serious threat to India’s economic health.

      “It has a massive impact,” said Ramesh Nair, India head of property consultancy JLL. “If the real estate economy doesn’t pick up, the overall country will be in trouble.”

      Non-bank finance companies provide loans for everything from roads to housebuilding and new washing machines and cars for consumers. But the sector faced a reckoning in September when infrastructure group IL&FS defaulted on debt, prompting a government intervention dubbed India’s “Lehman moment”.
      This episode highlighted how many of these companies had borrowed short-term money cheap and made a profit lending to developers over longer terms. After the danger of this mismatch became apparent, investors rushed to recover their money, prompting the banks and mutual funds that had fuelled the non bank sector’s growth to pull back.

      In Mumbai, the glut of expensive housing has only increased. Unsold inventory in the city rose 14 per cent in the first half of 2019 from the same time a year earlier, according to Knight Frank.

      Indiabulls is now auctioning off Palais Royale to help recover Rs9.9bn from the developer. The property did not sell after an initial auction for a minimum price of about Rs8bn, prompting the company to lower its price closer to Rs7bn for a second auction in June.

      The company said it was evaluating bids. But two people familiar with the matter said that Indiabulls had homed in on a buyer, and the sale was entering its final stages.

      The vision for the project, started a decade ago, was spectacular. At more than 300 metres, Palais Royale was to be the tallest building in India with some 100 flats and amenities including a spa and cricket pitch, according to promotional videos and property websites.

      “Everybody who is in industry, the captains of industry, booked an apartment there. All lawyers, bankers, industrialists — all of them have apartments there,” said Vishal Srivastava, Anarock’s head of corporate finance.
      But progress was soon slowed by legal challenges over allegedly unauthorised features, sparking a series of delays. Indiabulls became involved in the project in 2011, refinancing a loan originally provided by a bank, but by 2016 — with the project still not finished and ongoing legal challenges — the company wrote off its investment as a non-performing asset.

      However grand the planned building, Palais Royale’s woes fit a familiar pattern: 30 per cent of real estate projects and half of all built-up space in Mumbai is under litigation, according to a 2019 Brookings India report, with projects taking an average of eight and a half years to complete.

      Investors remain uneasy. Indiabulls’ share price has fallen 50 per cent from a peak in August, while the stock of major non bank financial company Dewan lost almost 90 per cent of its value over a similar period. Lending from mutual funds and others to the shadow banking sector remains muted.

      Debt levels at a group of real estate developers sampled by Credit Suisse, meanwhile, rose by 50 to 100 per cent in the past four years. “One risk is that, for real estate developers, the true magnitude of debt may be under-reported,” said Ashish Gupta, Credit Suisse’s head of India research. “Clearly the outlook isn’t great.”

      Concerns that more defaults could spark contagion across Indian business have prompted repeated calls for the government to intervene and avoid a larger crisis. In early July, India’s finance minister Nirmala Sitharaman said the government would tighten regulation of non bank financial companies and create incentives for public-sector banks to boost lending to the sector.

      Some life-long residents of Mumbai, meanwhile, lament the frenzy of construction that has gripped their city over the past decade, as apartment complexes mushroom in the city’s central neighbourhoods and push its already clogged roads and strained infrastructure to breaking point.

      “They’ve built buildings which you can’t get to any more. The city is not able to keep up,” said one prominent billionaire industrialist. “It has just created this whole mess.”


      • #13


        Re : Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

        Sale of part in project
        Attached Files


        • #14


          Re : Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

          Bombay HC stays today’s plot auction to repay SoBo flat buyer

          MUMBAI: The Bombay high court on Wednesday stayed an auction scheduled for Thursday of a plot adjacent to the jinxed 56-floor under-construction tower
          Palais Royale at Worli Naka.

          The city collector was to auction a 3,000-square-foot portion of an open plot at Shree Ram Mills to recover dues for a flat buyer under the real estate regulatory Act. The buyer had cancelled the agreement following inordinate delay in possession.

          The stay comes after an official liquidator (OL) appointed for developer Shree Ram Urban Infrastructure Ltd submitted a report objecting to the auction. The OL, a government officer, was appointed in 2016 to oversee distribution of dues to creditors of the developer

          Prathamesh Kamat, counsel appearing for the OL, said the collector was seeking to auction the plot without consulting with the liquidator, as the high court had directed in an earlier December 2018 order.

          Kamat also said the plot being auctioned was different from the asset, a spacious flat with garages, under the Maharashtra Real Estate Regulatory Authority (MahaRera) order.

          The developer is in provisional liquidation and is the owner of Shree Ram Mills.

          Justice K R Shriram, who heard the matter on Wednesday, directed in an interim order that the auction not be held until further orders, and placed the matter for hearing after a month.

          A couple, Ajit Sanghavi and Malini Sanghavi, had filed a complaint in November 2017 before MahaRera against the developer.

          Sanghavis’ counsel Snehal Paranjpe pointed out that last December, the high court had permitted the auction after MahaRera held in favour of buyers in March 2018. She said the collector has heard the OL before proceeding with the recovery measures. The couple wanted the high court to direct the liquidator to pay them Rs 24 crore with 10% annual interest from July 1, 2018, till repayment of the amount as directed by MahaRera.

          On December 12, 2018, the HC had directed the city collector to sell assets of Shree Ram Mills in consultation with the OL and the amounts recovered will be deposited with the OL who would then invest it in a fixed deposit of a nationalized bank and not disburse any amount without the court’s prior permission. The OL said he had written to the collector on July 17 to stop the auction which it said was in complete violation of the HC order.

          Kalpataru Properties, through counsel Fredun DeVitre, also said the auction would affect their existing right of way as their projects are in the vicinity.


          • #15


            Re : Palais Royale by Shree Ram Urban Infrastructure, Lower Parel, Mumbai

            Supreme Court clears India's tallest project Palais Royale

            MUMBAI: Almost a decade after allegations of building violations first surfaced, the Supreme Court on Thursday cleared the completion of
            Palais Royale touted as the country's tallest residential building, at Worli Naka.

            The SC overturned a Bombay HC order and dismissed the appeal filed by NGO Janhit Manch, which had challenged the excess refuge areas granted to the skyscraper by BMC and a public parking lot (PPL) building on the adjoining plot.

            The 294-metre (56-floor) tower has been jinxed for its promoter, the Vikas Kasliwal-run Shree Ram Urban Infrastructure (SRUIL), and dozens of flat buyers who paid Rs 25-50 crore for each of the luxury apartments.

            Earlier this year, Indiabulls auctioned the property after SRUIL failed to back loans amounting to Rs 915 crore. A little-known company called Honest Shelters bought the tower for Rs 705 crore.

            "We have examined the matter on merits, notwithstanding that we are not satisfied with the bona fides of PIL, as the litigation has a chequered history and has several rounds," the SC said.

            The apex court directed the BMC to take over the PPL and "proceed further to decide concerning 13 floors (44th to 56th floors) of the residential building within one month from today".

            The commencement certification was of February 2005, and in 2008 development rules were modified to allow work on the multi-storeyed parking lots abutting the roads.

            On the parking area being constructed and handed over to the corporation, free of cost, private owners would be entitled to an incentive FSI, not reserved for any public purpose. SRUIL had applied for the construction of the PPL. The plans were approved for the construction of three basements, a ground floor, and 15 upper floors. The commencement certificate was up to the plinth level of the PPL, including three basements. The SC noted that the PPL has been constructed entirely.

            "Though the commencement certificate granted by the corporation is up to the plinth level, including the basements, so far as commencement certificate for the upper floors of the PPL is concerned, SRUIL has relied upon deemed permission," said the SC.



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