NEW DELHI (INDIA): The Delhi High Court has stayedthe recovery proceedings against a real estate developer overalleged failure to repay a loan amount of over Rs three croreto a company which had lent the money.
Justice Jayant Nath also appointed a retired district andsessions judge as an arbitrator to adjudicate the disputebetween the parties.
The court said the arbitrator will function under theaegis of the Delhi International Arbitration Centre (DIAC).
“The ‘sarfaesi’ (recovery) proceedings shall remainstayed for the duration of the arbitration proceeding,” itsaid.
The court said the director of M/S Proto Developers andTechnologies Ltd, the real estate developer, will pay a sum ofRs 50 lakh in three monthly instalments to the lender, DewanHousing Finance Corporation Ltd (DHFL).
Recovery proceedings allows banks and other financialinstitutions to auction residential or commercial propertiesto recover loans.
The court’s order came on DHFL’s plea, which had soughtsetting aside of the arbitrator’s January 29 order staying theproceedings against the real state developer.
DHFL, a housing finance company, has claimed that underthe arbitration clause in the loan agreement, the arbitratorwas to be appointed by them.
The firm without following the procedure as mentioned inthe loan agreement, signed between the parties, had appointedthe arbitrator in an erroneous and misconceived manner, DHFL’scounsel had contended in the petition.
Advocates Pankaj Garg and Milind Garg, appearing for thereal estate developer, had submitted that DHFL was needlesslyadding unnecessary charges and not giving them any of thedetails.
“A housing loan of Rs 3.75 crore was availed by the firmin 2007 and till 2016, Rs 4.40 crore was paid to DHFL,” thecounsel had said, adding that DHFL has charged approximately19 per cent rate of interest per annum instead of 8.75 percent as per the guidelines of the Reserve Bank of India (RBI).
The firm’s counsel had contended that the admitted amountof loan in terms of the interest rate as per the RBI was Rs 50lakhs only against the demand of DHFL of approximately Rsthree crore.
The high court has referred the matter to the DIAC foradjudication of all disputes between parties.
As per DHFL, it had in September 2007 had grantedfinancial assistance to the real state developer enabling itto purchase two flats at Greater Kailash in south Delhi.
It said that after the firm had failed to repay the loan,they approached the trial court seeking to appoint a receiverto take possession of the property, which was allowed.
However, the arbitrator appointed by the firm had stayedthe recovery proceedings.
Source: Press Trust of India