Tribunal asks ARCIL to stay auction of Tulip Star hotel

MUMBAI: In a major relief to Mumbai-based realty firm Nirmal Lifestyle, the Mumbai bench of Debt Recovery Tribunal ( DRT) has directed stress asset firm ARCIL not to proceed further on auctioning of the Tulip Star (erstwhile Juhu Centaur) Hotel at prime Juhu Tara Road in Mumbai.

On Tuesday, DRT restrained the country’s largest asset reconstruction company from auctioning the sea-facing property till further orders. Also, the tribunal has directed Ajit Kerkar-promoted V Hotels to deposit Rs50 crore within 8 weeks in dues out of a total of over Rs235 crore.

“The tribunal has passed an order on securitization application, which will protect the developer’s interest to develop 2.5 lakh sq ft of retail space here,” said Ashok Paranjpe, managing partner, MDP Partners, representing Nirmal Lifestyle in the matter.

P Rudran, MD & CEO, Asset Reconstruction Company (India) or ARCIL, declined to comment on the matter saying that he has not seen the order yet.

ARCIL, which had acquired the property from four banks, has been trying to sell the asset to recover its dues. However, the last attempt to sell the hotel failed as it did not receive bids from any entity.

The property comprises basement, ground floor and six upper floors along with open floors. The property has a total of 1.2 million sq ft of available floor space index or permissible development on the plot.

The existing hotel structure has around 8 lakh sq ft space including 2.5 lakh sq ft of retail, 3.5 lakh sq ft of hotel and 2 lakh sq ft for service areas and parking.

The auction notice has set a reserve price of Rs1,315.25 crore for the hotel, while ARCIL’s dues are worth Rs235 crore. The developer argued that the property is valued much higher than the claims and hence the sale of entire property is unjustified.

Under an agreement in 2003, Tulip Star gave 2.5 lakh sq ft to the developer to set up a mall. Nirmal Lifestyle in turn had paid Rs30.6 crore to Tulip Hospitality to develop the mall.