Piramal Capital Recognized as Creditor in Radius Project’s Mumbai Development.

MUMBAI: The National Company Law Tribunal (NCLT) has confirmed the validity of the charge held by Piramal Capital & Housing Finance on Radius Estate Projects’ 5.4-acre development in Santacruz, Mumbai.

This ruling, announced on Wednesday, settles a disputed issue involving creditors, including J.C. Flowers Asset Reconstruction and Piramal Capital & Housing Finance, by clarifying the financial responsibilities related to the Avenue 54 project.

Radius Estate Projects, previously Vishwaroop Realtors, faced a legal conflict over loans initially totaling Rs 700 crore, secured by mortgages on the project’s land and assets.

In 2016, a mortgage deed was executed in favor of IDBI Trusteeship to secure a loan from Yes Bank, later transferred to J.C. Flowers Asset Reconstruction. Additional loans raised the total to Rs 700 crore, with further charges on the property.

By 2018, Diwan Housing Finance Limited (DHFL), which was later acquired by Piramal Capital & Housing Finance, had sanctioned a total of Rs 2,000 crore in project loans to Sumer Radius Reality, the developer’s arm.

The conflict arose when Sumer Radius Realty and other joint developers defaulted on loan repayments, but a mortgage was created for Avenue 54 in favor of DHFL without the necessary No Objection Certificate (NOC) from Yes Bank, the original mortgage holder.

J.C. Flowers Asset Reconstruction contended that the charges created for DHFL, now Piramal, were illegal and sought to exclude Piramal from being recognized as a financial creditor of Radius Estate Projects.

The NCLT, after careful consideration, ruled in favor of Piramal Capital & Housing Finance, acknowledging that while the initial NOC from Yes Bank was conditional and later revoked, the subsequent mortgages and financial arrangements by DHFL/Piramal were legitimate. The tribunal found J.C. Flowers Asset Reconstruction’s claims to invalidate these charges to be unsubstantiated.

The NCLT’s decision confirms that Piramal holds legally binding charges over the Avenue 54 Project, solidifying its position as a significant financial creditor.

J.C. Flowers Asset Reconstruction was represented by advocate Rohit Gupta, while the company’s resolution professional Vithal M. Dahake was represented by Amir Arsiwala, and Piramal Capital & Housing by Ryan Dsouza.

In June 2023, Piramal Capital & Housing sold a Rs 3,656 crore bad loans portfolio to Omkara ARC, including loans to Radius Estate Projects.

This ruling has substantial implications for all parties involved in the Avenue 54 Project. For Piramal Capital & Housing Finance, it reinforces their creditor rights and secures their financial interests.

For Radius Estate Projects, it clarifies their financial obligations and the priority of creditor claims, highlighting the importance of adhering to proper financial procedures and obtaining necessary approvals when creating charges on mortgaged properties.