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HDFC Ltd, India’s largest mortgage lender, may seek intervention from the Supreme Court to challenge the decision made by the National Company Appellate Tribunal (NCLAT) allowing the sale of the IL&FS headquarters in Mumbai to Canadian investor Brookfield. The sale was approved despite HDFC's objection, and the matter is pending before the court.
IL&FS, is an infrastructure lending firm that went bust in India's biggest-ever bankruptcy case. The Resolution Professional proposed to sell the company’s head office property located in the prime business district of Mumbai's Bandra Kurla Complex. The sale includes 12,651.95 square meters of land at Plot No. C-22, in the G Block of Bandra Kurla Complex together with the IL&FS Financial Centre.
IL&FS had previously informed HDFC Bank that it could not enforce any security interest created over the assets of IL&FS and its 348 group companies following an NCLT Mumbai bench order that stayed the enforcement of any security interest. HDFC had offered to provide a lease rental discounting loan of 400 crore to IL&FS, and a master facility agreement was executed on June 25, 2018. However, the NCLT Mumbai bench stayed the enforcement of any security interest created over the assets of IL&FS and its 348 group companies in October 2018.
The NCLAT also issued a directive in May 2019 prohibiting banks from recovering any dues from the distressed IL&FS group or its companies until their resolutions were addressed. Meanwhile, IL&FS invited expressions of interest for the property's sale, and the committee of creditors approved Brookfield Private Capital entity Project Holding OFFICES Seven's (DIFC) bid of 21,080 crores by a 73.5% vote.
IL&FS has filed a caveat before the Supreme Court to ensure that the court doesn't pass any order on the matter until the company is heard. As of September 2022, IL&FS has resolved debt worth 256,943 crore, nearly 93% of the total estimated debt that it committed to resolving, according to an affidavit submitted to the NCLAT.
This dispute highlights the importance of the "right of first refusal" clause in agreements. This clause gives a particular party the first opportunity to buy a property or asset before it is offered to other parties. It is often included in contracts to protect the interests of the parties involved, especially in situations where there may be a potential conflict of interest.
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