The Supreme Court has brought relief to investors in Mumbai's Palais Royale skyscraper, upholding the 2019 public auction sale by Indiabulls Housing under the Sarfaesi Act. Pune's Honest Shelters secured the property for Rs 705 crore, ending a decade-long saga of uncertainty initiated by Shree Ram Urban Infrastructure's default on Rs 900 crore loans. The Palais Royale Members' Association, representing buyers, faced a tumultuous journey. The Supreme Court clarified NCLT's inability to scrutinize Sarfaesi Act auctions, endorsing High Court and MahaRERA orders. Of the 164 apartments, 76 are booked, with the rest available. Honest Shelters aims for March 2024 handovers, addressing compliance concerns with over Rs 580 crore in additional expenses.
In a significant development, the Supreme Court has provided a glimmer of hope to numerous high net worth individuals who invested tens of crores a decade ago to secure luxury apartments in the illustrious Palais Royale skyscraper, a mighty structure soaring 294 meters high with 56 floors, making it one of the tallest residential towers in the country.
On December 6, the Supreme Court upheld the public auction sale of the Palais Royale by Indiabulls Housing in 2019 under the Sarfaesi Act. The successful bidder at the auction was the relatively unknown Pune-based developer, Honest Shelters, which acquired the property for a staggering Rs 705 crore.
The Palais Royale project faced a protracted period of uncertainty, starting in 2010 when Shree Ram Urban Infrastructure Ltd, currently undergoing liquidation, defaulted on loans exceeding Rs 900 crore from Indiabulls Housing Finance Ltd. The project remained in limbo for almost a decade, stuck in a web of litigation that left dozens of high-profile individuals, including doctors, builders, fund managers, stock brokers, corporate executives, and NRIs, in a state of uncertainty.
The Palais Royale Members' Association, formed by disgruntled buyers, had already paid 20-100% for their homes, ranging from 4,000 to 8,000 square feet, with some of the larger flats fetching prices exceeding Rs 50 crore each. The project began in 2009 and faced allegations of building violations from the NGO Janhit Manch. In 2019, the Supreme Court overturned a Bombay High Court order, paving the way for the project's completion and dismissing the appeal filed by the NGO.
The Supreme Court's decision not only clarified that the National Company Law Tribunal (NCLT) cannot scrutinize auction sales conducted under the Sarfaesi Act but also affirmed the orders issued by the High court and MahaRERA regarding the rights and obligations of Honest Shelters for the project's completion and the handover of apartments to homebuyers, according to a source closely associated with the project.
Out of the 164 apartments in Palais Royale, 76 have already been booked, while the remaining units are still available for purchase. A source confirmed that all necessary permissions are in place, civil construction is finished, and a partial occupation certificate (OC) has been obtained up to the 27th floor. However, a flat buyer said that despite receiving the partial OC over a year ago, the builder has failed to deliver a single flat. The source explained that a partial OC alone does not permit the handover, as amenities and facilities are yet to be completed and made functional. The anticipated handover of interiors is expected to occur by March 2024.
Addressing compliance concerns, Honest Shelters has implemented necessary changes to bring the project in full compliance with building codes. The additional expenses for the builder, including construction costs, amount to over Rs 580 crore.
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