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Barnaparichay – a one of its kind proposed book mall in India, located on College Street in North Kolkata – may soon be put under the hammer. A consortium of banks, led by the State Bank of India (SBI), is planning to auction it for a loan default of Rs 157 crore.
The proposed four-storey mall at an estimated cost of Rs 100 crore, conceived as a “showpiece” in 2007, was to be jointly developed by the Kolkata Municipal Corporation (KMC) and Bengal Shelter on a public-private partnership basis.
The consortium of banks took “symbolic possession” of 70 per cent of the property in April this year after the private developer (Bengal Shelter) failed to clear dues. Bengal Shelter holds about 70 per cent equity and the rest is held by KMC.
Other banks in the consortium include Corporation Bank, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Travancore.
According to a senior SBI official, the next course of action would be to sell off the mall property to another developer.
Loan details
According to information accessed by Business Line , the loan was given to Barnaparichay Book Mall Pvt. Ltd, with Bengal Shelter Ltd and Shelter Project Ltd as corporate guarantors. The MD of Bengal Shelter and Housing and Chairman of Shelter Project, Samarendra Nag, is also a director of Barnaparichay.
When the loan was not repaid, the consortium issued a notice to Barnaparichay in November, asking it to repay by January 2013.Now, according to Nag, the company is in talks with banks for a one-time settlement of the account.
“We had asked for a corporate debt restructuring on the account but the consortium declined. We are now in discussion for a one-time settlement,” he added.
Legal Battle
Meanwhile, KMC is contemplating legal action if the consortium decides to opt for an auction.
“We have sent details of the agreement and the loan papers to the Advocate General for his opinion,” Tarak Singh, member-mayor-in-council (markets) told Business Line .
According to Singh, the agreement for joint development was between Bengal Shelter and KMC.
Loans were to be taken by Bengal Shelter only. Instead, Bengal Shelter violated the agreement by floating a new company called Barnaparichay and taking loans in its name.
“This is illegal and the consortium should have referred the matter to us before granting the loan,” he said.
Nag, however, denies the charges of irregularities. According to him, Barnaparichay is a wholly-owned subsidiary of Bengal Shelter and the loan was granted on these grounds.
“Barnaparichay is a special purpose vehicle and it has been floated exclusively for the project,” he said, adding that the company would hand over KMC’s stake in the project in a year.
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