Kozhikode: The Vigilance Court has ordered a preliminary inquiry into the allegation that the officials of the Kerala Financial Corporation (KFC) had colluded with private parties to auction a commercial complex here worth Rs 40 crore for just Rs 9.18 crore!
The building, named Pearl Hill, is situated at the centre of Kozhikode city, next to Focus Mall near the moffusil bus stand.
It is alleged the building was sold via e-tender without even informing the building owners. The owners had defaulted on loan repayment at the peak of the COVID-19 crisis.
The building construction began in 2013 with a loan of Rs 4.89 crore from the KFC. The building is of 48,195 square feet area and stands on a plot measuring 40.06 cents. The owners repaid loan installments to the tune of Rs 2.60 crore till February 2020. Thereafter, they defaulted in paying installments, ostensibly owing to revenue loss in the wake of mandatory shutdowns necessitated by the pandemic.
The KFC estimated the total repayment amount to be Rs 9.56 crore after adding interest and fine. After continued default on repayment, the KFC took over the building and began e-auction proceedings. But the owners were not informed of this matter.
Classified advertisements were given in three newspapers. Two persons submitted tenders. The building was auctioned to a person from Kollam who quoted the highest rate.
Later, a major deception occurred. When the title deed for the property was registered, the auction winner was made a witness. As per his suggestion, the land and building were registered in the name of four other persons, including the son of the person who came second in the auction. Mutation of the property was also done in their names.
Though it was auctioned for Rs 9.18 crore, they paid only Rs 4.18 crore as price. The rest of the amount, Rs.5 crore, was given as a loan by the KFC.
KFC says all formalities followed
KFC Chief Manager C Abdul Manaf said that Pearl Hill building was auctioned after completing all procedures.
He claimed that the owners were issued notice. The land and building were registered in the names of four people whose names were proposed by the auction winner. There was nothing wrong in doing it, Manaf said.
Vigilance says inquiry soon
Vigilance Superintendent of Police PC Sajeevan said that the inquiry as ordered by the court would be conducted soon. The approval of the Vigilance Director has been sought in this regard. Once it is received, the procedures such as verification of documents will be conducted.
Series of violations
D Mohandas Kallayi, the lawyer representing the owners, said that the KFC had violated the guidelines issued by the Supreme Court while auctioning the property.
Here are the major violations cited by him:
1. The taken-over property should be kept for public auction. The owners should be given first preference to repay the loan arrears and take possession of the property. In this case, no such attempts were made.
2. The owner was not informed of the auction through a letter to be sent by registered post.
3. The property was undervalued. The building is on 40 cents of land. The market value of one cent of the land is Rs 75 lakh. The total area of the building is 48,197 square feet. The construction cost is Rs 2,000 per square foot. The minimum valuation of the property comes to Rs 40 crore, but it was auctioned for a throwaway price of Rs 9.18 crore.
4. The land was not registered in the name of the person who won the auction. It was registered in the name of four others. One among them is the son of a person who reached the second position in the auction.
5. As per the rule, the full amount has to be paid after the auction. But they paid only Rs 4.18 crore. The rest was adjusted as a loan from the KFC.
6. KFC, which earlier estimated a value of Rs .9.56 crore for the property, fixed only Rs 9.15 crore as the basic selling price.
