NCLT rejects Vistra ITCL’s plea to include additional claim in Satra Properties insolvency, ET RealEstate

March 6, 2024

<p>Representative Image</p>
Representative Image

The National Company Law Tribunal (NCLT) dismissed an application filed by Vistra ITCL to direct the resolution professional (RP) of realty developer Satra Properties India to include its additional claim of Rs 51 crore that would have taken its total admitted claim to over Rs 131 crore.

Vistra informed the bankruptcy court that the RP had partially rejected the lenders’ financial claim, which should have been admitted in its entirety. Currently, the admitted amount against Satra Properties is around Rs 386 crore, wherein Vistra has a 22.25% voting share with admitted dues worth Rs 79 crore.

Calculation of interest on outstanding non-convertible debentures (NCDs) formed a key component of the matter. In its application, Vistra argued that originally, it had agreed with Satra Properties to lend the funds at 18% interest per annum; however, the RP has calculated its dues at a lower revised rate of 9%.

The dispute centred around whether failure to redeem the NCDs would revive the original interest rate of 18% or if the reduced rate of 9% would continue to apply.

Appearing for the RP, advocate Pulkit Sharma argued that if both parties intend to revoke the 9% interest rate and revive it at 18%, it would have been expressly specified in the agreement as it was mentioned when interest was reduced from 18% to 12%. The specific non-mentioning of the clause in the subsequent agreement clearly establishes the intention between the parties, Sharma said.

The Mumbai bench of NCLT examined communication between the parties and noted that while the initial agreement allowed for penal interest at the rate of 6% in case of default, subsequent communications reducing the interest rate did not mention any provision for penal interest.

The bankruptcy court interpreted this omission as indicating that penal interest could not be levied for delay in redeeming the debentures. The tribunal emphasised that since there was no stipulation for penal interest in the revised agreement, the priority of dues prevailed, and penal interest could not be levied.

The bankruptcy court’s decision underscores the importance of clear and explicit agreements in resolving disputes related to financial claims in insolvency proceedings.

In December, the NCLT accepted IIFL Finance’s application to admit its claim against Satra Properties under the category of financial debt in the ongoing case between the developer and Vistra.

The National Company Law Appellate Tribunal (NCLAT) upheld NCLT’S decision to admit the company under the corporate insolvency resolution process (CIRP) in 2022 despite rejecting a petition from the developer’s promoter.

IIFL Finance had extended debt to Satra Properties in two tranches between November 2015 and September 2016. The loans were secured through mortgages of certain properties and land parcels in Mumbai’s Ghatkopar and Borivali suburbs, pledges of over nearly 62% of the equity stakes of promoters of the company, personal guarantees, promissory notes, etc.

NCLT orders insolvency proceedings against Sankalp Siddhi Developers

The SPV was promoted by Ahuja Hive, now known as Hive Carbon-Zero Developers, for the development of a project in Mumbai’s Jogeshwari suburb, and has been controlled and managed by Chinese group Fosun since 2022.

  • Published On Mar 6, 2024 at 08:59 AM IST

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