Palais Royale owner defaulted on Rs 600 crore loan: Lender

MUMBAI: The promoter of India’s tallest under-construction residential building, Palais Royale at Worli, has been accused of defaulting on a construction loan of over Rs 600 crore. The lender, Indiabulls Housing Finance, has dragged developer Shree Ram Urban Infrastructure Ltd (SRUIL) to the National Company Law Tribunal (NCLT) for non-payment of seven loans and sought a change of promoter. Indiabulls, it is learnt, has raised a demand of Rs 708 crore which includes interest and other charges. The lender wants the property, a 56-storey tower on a 7-acre plot controlled by SRUIL, to be auctioned. NCLT is scheduled to hear the case next week. Vikas Kasliwal of SRUIL did not comment when contacted by TOI. The Rs 3,500-crore project has been mired in litigation for five years following allegations of large-scale rule violations made by a city NGO. The biggest sufferers are people who booked the sprawling apartments, many costing between Rs 30 crore and Rs 50 crore each. Many flat buyers have already paid 50% to 70%, while some are believed to have paid the entire amount. The unoccupied skyscraper, which has almost reached its full height of 294 metres, is the tallest in the country at present. There are some under-construction towers in Mumbai which will be still higher when completed. “SRUIL was irregular and committed a breach in making payment towards the EMI. In fact, no EMI was paid after June 30, 2017,” sources in the housing finance firm said. Indiabulls issued three legal notices last October to the promoter demanding repayment. “However, SRUIL has not made any payment nor provided any explanation,” sources said. Of the 14 lakh sq ft of saleable area in Palais Royale, the builder has so far sold about 8.65 lakh sq ft. The apartments booked so far have fetched about Rs1,350 crore for the builder as part payment, while another Rs1,000 crore is still to be received from flat buyers. “The builder needs to sell at least two flats every quarter to service the loan,” said sources familiar with the project. Many clients who paid top bucks for the sprawling apartments found themselves in a bind after work on the tower stopped. The work commenced in 2009, but the project was soon embroiled in litigation when NGO Janhit Manch filed a PIL in the Bombay high court claiming the builder had flouted construction norms. Refuge areas, passages, swimming pools and structural columns were not included in the floor space index (FSI) when its plans were approved by the BMC a decade ago. A BMC inspection found that a humongous 74% of the total built-up area (5.88 lakh sq ft) of the skyscraper was shown as fire refuge area. This was sanctioned by the then chief fire officer when building plans were approved. In 2016, the municipal commissioner ordered the developer to seal or rupture four fire refuge floors and large refuge areas outside each apartment so that they cannot be misused. The commissioner in his report, prepared following a directive from the high court, also ordered that large refuge areas outside the entrance of each apartment in the 56-storeyed tower would have to be blocked. This was to prevent the flat owner from illegally amalgamating the refuge area and making it part of the apartment. These areas are adjoining the bedroom and drawing room of the flats.