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Kingfisher House sale on hold as banks, I-T department fight

It may take a while for banks to auction off the Kingfisher House at Vile Parle, with the consortium of banks and the tax authorities fighting a legal battle over the property.

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Kingfisher House at Vile Parle
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It may take a while for banks to auction off the Kingfisher House at Vile Parle, with the consortium of banks and the tax authorities fighting a legal battle over the property.

Banks have challenged the demand by the income-tax (I-T) department for the first right over the property dues in the Karnataka High Court, where they are already fighting a case against the airline to take possession of its assets in lieu of outstanding dues.

I-T authorities are claiming dues of over Rs 400 crore.

Kingfisher House has been the headquarters of the grounded airlines. In February 2015, lenders took possession of the property under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, popularly known in banking circles as Sarfaesi Act.

The property is worth over Rs 1,000 crore, according to real-estate consultants.

A senior banker, who is part of the consortium, told dna: "It is very unfair that tax authorities are knocking at our doors after we have won the property after a long-drawn battle against the company."

Banks got possession of the property after the chief metropolitan authority ruled in their favour.

State Bank of India (SBI) Trustee company has put up two notices in front of the building. Subsequently, the I-T department has shot off letters to banks, claiming their rights in lieu of the I-T dues that the company had.
In an earlier case, the Supreme Court had ruled that the lenders' case will take precedence over all other dues because banks have lent money.

Last week, I-T authorities sent a communication to select banks such as IDBI Bank, staking claim to the property. With lenders making the I-T department a party to their case, they will now wait for the verdict from the court before putting the property on sale.

SBI is leading the consortium of 17 banks in the fight for the lenders' rights. Kingfisher Airlines, which was grounded in 2012, owes the consortium about Rs 7,000 crore.

Banks are fighting a string of legal battles against the company in the Karnataka High Court and the debt recovery tribunal in Bengaluru under the Sarfaesi Act.

Banks have been trying to sell off the assets of the company while taking the loan. Banks have sold around 4 lakh shares of United Spirits pledged with them for over Rs 104 crore in 2012-14. Vijay Mallya's Goa villa is the next property that banks are likely to get possession of.

Another banker in the consortium said, "The cost of the long-winded legal battle was borne by banks and the I-T claim on the property due to banks is unfair."

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