Pavan Sachdeva's woes increase with a tribunal order
THE Debt Recovery Tribunal has struck another blow to MS Shoes CEO Pavan Sachdeva's childhood dream of build-ing a five-star hotel in Delhi. At 2 pm on November 29 in Delhi, it passed an interim order restraining him from disposing of his immovable properties.
The properties include 17 acres of land in Gurgaon being utilised to manufacture yarn, the 17.5-acre HUDCO plot in Delhi's Andrewsganj area where he was to build the hotel, nine guesthouse plots adjacentto the hotel site, eight manufacturing sheds at the Delhi State Industrial Development Corporation complex in Nangloi, his registered office in East Punjabi Bagh and another plot in Punjabi Bagh.
Sachdeva had obtained the 17.5-acre plot in Andrews-ganj on October 30 last year from HUDCO for Rs 177 crore (as per details mentioned in his prospectus). He had proposed to pay for the plot and construction of the hotels (one five-star and another four-star) through his Rs 428-crore public issue last February. When he was slapped with price rigging charges, the issue flopped. Since then, the financial institutions he had borrowed heavily from, expect-ing to pay them back once he raised funds from the public, have been at his throat.
The Industrial Development Bank of India (IDBI) had moved the tribunal through its counsel Kesar Dass B. and Associates (KDB) on November 27. It filed a recovery suit of approximately Rs 89 crore against MS Shoes East and its five promoters (Pavan Sachdeva, who was the sole guarantor, and four of his relatives who were pledgers of their shares as collateral). Before its ill-fated public issue this February, IDBI had forwarded five loans to MS Shoes East between November 1993 and September 1994, apart from picking up 17 per cent non-convertible debentures for Rs 15 crore in Sachdeva's company. The loans included a foreign currency loan and a short-term loan of Rs 50 crore advanced against the rights-cum-public issue which got Sachdeva into all sorts of trouble.
On November 29, the tribunal took up the matter again and KDB, represented by its partner Sumant Batra, convinced the tribunal to issue an ex-parte interim order restraining Sachdeva from disposing of his immovable properties until January 24, the date fixed for hearing the case. In its order, the tribunal said: "In case an ex-parte interim order is not granted at this stage, the respondents may dispose of their property." Under the order, Sachdeva cannot sell the properties in any roundaboutway also, for instance, by selling off the companies which own the properties.
Apart from the Rs 89 crore that Sachdeva owes IDBI, he had also borrowed Rs 30-35 crore from the Travel Finance Corporation of India and the Industrial Finance Corporation of India before his public issue. Sources say it is highly unlikely that Sachdeva has started repaying these loans. On his part, Sachdeva has always maintained that whatever his problems, he will build his hotel. Indeed, the one payment he has not defaulted on is the instalments to HUDCO for the Andrewsganj plot. But with his creditors turning decidedly nasty and even the land for the proposed hotel beginning to slip out of his control, Sachdeva's teenage dream looks likely to remain in the realms of fantasy.