Tuesday, February 28, 2017

Buyers offer Rs 45 crore to take over plush project from Orbit

Mumbai Mirror‎‎‎‎: Mumbai: Tuesday, February 28, 2017.
Though the banks, to whom Orbit owes money, rejected the offer, HC has said talks must continue.
A group of buyers, who invested their lives’ savings into a plush south Mumbai project stalled since 2015, is showing the way to those stuck with such projects across the city.
The buyers, instead of waiting for Orbit Corporation, the developer of the stuck Orbit Terraces at Lower Parel, have decided to raise money to take over the project.
Though the nearly hundred buyers saw their first offer of Rs 45 crore made to two banks, to whom Orbit owes the amount, rejected, the talks are still on.
On Monday, the Bombay High Court directed the consortium, comprising the State Bank of India and the Union Bank of India, to try and work out a solution for settling Orbit’s loan dues with the flat purchasers. If the deal works out, it will be the first of its kind in Mumbai and could offer new hope to buyers in stalled projects.
Justice S J Kathawalla said on Monday that a meeting ought to be convened at noon on Saturday between the flat purchasers and the general managers of the banks.
The court was hearing a suit filed by the aggrieved buyers, who want to take over the project so that they can complete construction work. Their lawyer Vivek Shiralkar told the court that they had proposed to pay Rs 45 crore as full and final settlement, but all they got from the banks was a “one-line reply rejecting the proposal.”
“They should tell us if they expect a higher amount, there needs to be some conversation at least,” Shiralkar told Justice Kathawalla after which he issued the order.
“Sit with them and discuss the issue and at least give reasons if you have to reject the offer,” Justice Kathawalla told the banks.
Orbit Corporation had borrowed Rs 135 crore from the consortium of SBI and UBI by creating a charge on the project in their favour. It has re-paid around Rs 76 crore and made an offer last year to cough up Rs 45 crore, the same figure that has been quoted by the flat purchasers.
But the banks maintain that they had rejected Orbit’s proposal last year to pay Rs 45 crore as full and final settlement and therefore, an offer of the same amount from the flat buyers was also not acceptable.
The movement of sorts to take the builder head on started about three years back when businessman Pravin Gandhi decided to file an application under the Right to Information Act to get the details of flat purchasers who had registered their agreement. He is now being called the anchor of this movement.
Gandhi got addresses of about 20 buyers through an RTI application and wrote letters to them. About seven to eight people responded and they had their first meeting at Gandhi’s office in Mahalaxmi towards the end of 2014. “After that, it was just about who knows whom and the number of people who became a part of this movement just kept going up,” he said.
Though it’s a high-end project with each flat costing more than Rs 4 crore, not all buyers have pockets deep enough to be able to raise the extra money required to take over the project.
Gandhi, who has over 35-years of operational and entrepreneurial experience in Indian IT and has been an active private equity investor in the technology sector for more than 10 years, says most of the “active” purchasers have not raised that concern yet. “But we know for a fact that not everyone would be able to bear that kind of burden.”
“We will be really happy if we can set an example for other such flat buyers whose projects have been stuck in a limbo for years ,” he said.
According to discussions held between the buyers, the additional cost for each flat is going to be in the range of Rs 3000-4000 per sq ft. “We have right now raised Rs 50 per sq ft per flat. There is a general agreement amongst the members that we would raise the money as and when the need arises. If banks agree for a settlement, we will come together and raise the money yet again,” says Gandhi.
Sudhir Tanna, a 63-year-old electrical engineer who runs his own company, says that they seem to be on the right track. “We just have to remain united. It may still take some time before we are able to move into our homes , but at least we are working towards it now instead of just waiting for the builder to do something.”
While Tanna doesn’t have a problem with bearing the extra burden that taking over the project will bring, he says he can’t afford to put money into a new flat in the vicinity because of this. “I had bought the flat in this project at my son’s insistence and we all feel really bad that we are not able to move into the two-and-a-half bedroom flat from the current one-bedroom house.”
Vivek Bajpayi, a 50-year-old banker, says he is not is a position to bear the extra cost and he had opposed the move when Orbit had asked for extra money from the flat purchasers. “Nobody trusted the builder who took about 60-70 per cent of the cost and did not give us our houses. I am staying on rent and paying home loan EMIs at the same time.”
When it was launched in 2010, the property, which consists entirely of luxury duplexes, was touted and sold as a potential SoBo landmark by Orbit Corporation. The construction of the 55-storey building progressed steadily until 2014, but it came to a grinding halt at the 40th floor in 2015.
The suit, which was filed in December last year by the buyers, states that most of them bought the flats between 2010 and 2014. Some of the deals were registered with Registrar of Stamps and many buyers were issued allotment letters too. The plaint further says that the buyers individually contacted office-bearers of Orbit on multiple occasions, but did not get any response.
The case will be again heard next week.