The Delhi High Court has stayed the recovery proceedings against real estate developer M/S Proto Developers and Technologies Ltd, over its alleged failure to repay a loan amount of over Rs 3 crores to Dewan Housing Finance Corporation, which had lent the money. Justice Jayant Nath also appointed a retired district and sessions judge as an arbitrator, to adjudicate the dispute between the parties. The court said the arbitrator will function under the aegis of the Delhi International Arbitration Centre (DIAC). “The ‘sarfaesi’ (recovery) proceedings shall remain stayed for the duration of the arbitration proceeding,” it said.
The court said the director of M/S Proto Developers and Technologies Ltd, will pay a sum of Rs 50 lakhs in three monthly instalments to DHFL. Recovery proceedings allows banks and other financial institutions, to auction residential or commercial properties to recover loans.
The court’s order came on DHFL’s plea, which had sought setting aside of the arbitrator’s January 29, 2017 order, staying the proceedings against the real estate developer.
DHFL, a housing finance company, has claimed that under the arbitration clause in the loan agreement, the arbitrator was to be appointed by them. The firm without following the procedure as mentioned in the loan agreement, signed between the parties, had appointed the arbitrator in an erroneous and misconceived manner, DHFL’s counsel had contended in the petition.
Advocates Pankaj Garg and Milind Garg, appearing for the real estate developer, had submitted that DHFL was needlessly adding unnecessary charges and not giving them any of the details. “A housing loan of Rs 3.75 crores was availed by the firm in 2007 and till 2016, Rs 4.40 crores was paid to DHFL,” the counsel had said, adding that DHFL has charged approximately 19 per cent rate of interest per annum, instead of 8.75 per cent, as per the guidelines of the Reserve Bank of India (RBI). The real estate firm’s counsel had contended that the admitted amount of loan, in terms of the interest rate as per the RBI was Rs 50 lakhs only, against the demand of DHFL of approximately Rs 3 crores.
The high court has referred the matter to the DIAC for adjudication of all disputes between parties. As per DHFL, it had, in September 2007, granted financial assistance to the real estate developer, enabling it to 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 receiver to take possession of the property, which was allowed. However, the arbitrator appointed by the firm had stayed the recovery proceedings.