Analjit Singh

Analjit Singh www.infralive.com 30 Infra LIVE May 15, 2022 to filing of a First Information Report (FIR) by the Police which led to arrest of the three promot- ers of the 3C group. They have been subsequently released on conditional bail due to reaching a set t l ement wi th the buyers promising time bound comple- tion of the project. Further, on January 10, 2019 NCLT has accepted insolvency petition against Granite Gate Properties Pvt Ltd (GGPL), a sister entity of investee, on the complaint of a home buyer and an Insolvency Resolution Profes- sional (IRP) has been appointed to carry on the resolutionprocess. Further, on February 8, 2019 the NCLT has accepted insolvency pe t i t i on aga i ns t Bou l evard Projects Pvt Ltd (BPPL) on the complaint of a home buyer and an IRP has been appointed to carry on the resolutionprocess. In light of the above develop- ments of 3C entities getting invo l ved in l i t i ga t i ons and insolvency proceedings, the residual probabilities of any recovery from 3C have further reduced and possibility of any recovery f rom 3C i s hi ghl y unlikely now. Therefore, the Company continues to value all investments in 3C at Nil value as at December 31, 2018 and has not obtained an independent valua- tion by IPC. Extract of Annual Report Jan-Dec 2019 Further, on January 10, 2019 NCLT has accepted insolvency petition against Granite Gate Properties Pvt Ltd (GGPL), a sister entity of investee, on the complaint of a home buyer and an IRP has been appointed to carry on the resolution process. The group has filed its claim for overdue interest which has been accepted by IRP. Further, on February 8, 2019 the NCLT has accepted insolvency pe t i t i on aga i ns t Bou l evard Projects Pvt Ltd (BPPL) on the complaint of a home buyer and an IRP has been appointed to carry absence of certainty of any recovery from existing 3C invest- ments or a commercial settlement through alternate assets, Board has exercised its discretion, as available to it in accordance with the fair valuation policy adopted by the Group, to value these investments at a lower amount than the valuation determined by Independen t In t e rna t i ona l Property Consultants (IPC). Since the company is not expecting to realise any amount from the said project, the fair values have been accounted for at Nil value. Extract of Annual Report Jan-Dec 2018 (additional comments) In addition to above, the Company observed that 3C has undertaken many transactions in default of various Investment Agreements entered with the Company for different projects and also in violation of the terms of the Settlement Agreement. Such in default transactions have caused significant reduction in the expected cash flows of these projects. The nature of such transactions includes sales much below the market prices, sales to settle unsecured loans taken by other 3C group companies, mis- utilisation of bank debts etc. This has also led to defaults in servicing of debts to secured lenders by the 3C pro j ec t compan i es . The company has served default notices to 3C under the Settlement agreement and various Invest- ment Agreements. Since there was no response from 3C, the com- pany has initiated Arbitration proceedings wherein an interim stay was granted over the four Special Purpose Vehicles (SPVs) holding projects which were offered to the Group under the Settlement. Further, Group's nominees have been appointed as directors on the board of these SPVs. A complaint by group of buyers of lotus 300 project being exe- cuted by Hacienda Projects Pvt Ltd, a sister entity of investee, led fencing of land sites, (iii) payment of certain identified liabilities, (iv) obtaining approval of buildings and layout plans, (v) execution of agreements for Delhi One office suites (220,000 square feet of saleable area) and sublease of 7.3 acres plot of land out of Lotus City I project, (vi) obtaining legal due diligence reports for land title fromindependent lawyers, etc. However, 3C has not taken any steps to complete the Conditions Precedents (CP) prescribed under the Settlement Agreement to enable the Group to move to Structure 2 whereby the Group gets full control and entitlement over the Structure 2 assets. In addition to above, during the year, the Group observed that 3C has undertaken many transac- tions in default of various Invest- ment Agreements entered with the Group for different projects and also in violation of the terms of the Settlement Agreement. Such in-default transactions have caused significant reduction in the expected cash flows of these projects. The nature of such transactions includes sales much below the market prices, sales to settle unsecured loans taken by other 3C group companies, misutilisation of bank debts etc. This has also led to defaults in servicing of debts to secured lenders by the 3C project compa- nies. The Group has served default notices to 3C under the Settle- ment Agreement and various Investment Agreements. Since 3C has not displayed any sense of urgency to cure the defaults, the Group is in advanced stages of pursuing legal action available under the laws of India. The legal process involves considerable time period and the projected surplus from these projects, if any, discounted to present value would reduce substantially. The above situation has led the Board to believe that there is substantial uncertainty regarding any future recover i es f rom any of the investments in 3C projects. In the