Pune-based developer Kumar Urban Development Ltd has filed a first information report (FIR) against alternative investment firm The Xander Group for allegedly deleting emails and conversations relating to a project that is the subject of an ongoing court case.
The Pune project -- Nirvana Hills -- has been in a legal tangle since the beginning of this year.
The agreement between the investor and developer dates back to 2013. In that year, the developer claims Xander had agreed to invest Rs 280 crore in the project as equity and listed non-convertible debentures. The proceeds had to be paid step by step and cash flow had to be distributed between both the parties from the sale of the project.
Accordingly, Xander appointed three directors on the board of the company, while the developer nominated two. The number of directors on the board was later reduced to three from five – two representing Xander while the promoter represented the developer. This gave more power and control of the project to the investor, said the FIR.
The developer alleges that in 2018, Xander appointed a separate control board of the company and took charge of the project. Kumar Urban Development also alleges that a resolution was passed in the same year, saying that the developer will not be held accountable for any delay in the project.
The FIR further says that all the previous employees working on the project were removed and a new project chief executive officer was appointed. New hires were moved from the server of the developer to a separate project-related domain name.
The developer alleges that when it complained about the delay in the project due to mismanagement by the new set of employees and senior management of Xander, the investor issued a default notice, asking it to pay Rs 450 crore as penalty and interest. This, as per the developer, is against the agreement. Going by the agreement, the investor had to get capital from cash flow and distributable amount from the sale of the project, said Kumar Urban Development.
Both the parties have filed civil suits, claiming their side of the story as true.
The emails and conversations that Xander allegedly deleted had to be produced in the court as legal evidence of the investor’s control over the project.
An email to Kumar Urban Development did not get any response. Xander, on its part, said that it does not hold or has ever held any equity shareholding in Pune-based Sinew Developers Pvt. Ltd, the special purpose vehicle developing Nirvana Hills. It further said that a Xander-advised entity, Singapore-based Ammon Holdings Pte. Ltd, is a senior secured lender to the project under a loan agreement executed in December 2014.
Xander said the borrower (Sinew) and its promoters -- Kumar Urban Development, Lalit Kumar Jain and Pranay Lalit Kumar Jain -- have defaulted on many payment obligations towards the lender. To recover money, Ammon Holdings has filed a suit before the Delhi High Court, which has prima facie found enough evidence to freeze all corporate and personal assets of the promoters, Xander said.
The legal issue between the developer and the investor is not new in real estate. Given the way the sector has performed in the last few years, a host of investors and developers has gone belly up and ended up washing their dirty linen in public.
A bunch of developers have now landed in bankruptcy court dragged by either home buyers or investors/lenders.