Vavasi and Chadha Groups Bid for Golden Forest India's Assets
In a potential landmark land transaction for India, the Supreme Court is set to hear bids from two companies vying for the entirety of Golden Forest India's (GFIL) land holdings on September 16. The companies in question are the Vavasi Group, promoted by National Knowledge Commission chairman Sam Pitroda, and the Delhi-based real estate firm, Chadha Group. GFIL is currently under liquidation.
Bidding for Rs. 2,000 Crore Investor Relief
"We have received applications from these two companies for the takeover of all the assets of Golden Forests. As long as we manage to raise Rs 2,000 crore, which would benefit GFIL investors, we have no objection," stated Justice RN Agarwal (Retd), chairman of the Supreme Court-appointed committee overseeing the sale of Golden Forests' assets. He confirmed this information from Chandigarh. GFIL’s land assets are distributed across several states, including Punjab, Haryana, Uttarakhand, Madhya Pradesh, Orissa and Andhra Pradesh. Mr. Agarwal further explained the committee's next steps: "We have forwarded these applications to the Supreme Court, which is expected to take up the matter in its next hearing on September 16.” He also revealed that the bids significantly exceed the defunct company's current liabilities, including interest, which amounts to Rs 2,000 crore.
Navigating Complex Legal Formalities
Before a bidder can assume control of the expansive land bank, approximately 110 companies, initially established by GFIL for land acquisition across the nation, must be merged with the parent company. The former judge elaborated on the intricate nature of this process: “This is quite complicated… a lot of legal formalities need to be completed first.” Industry analysts estimate the value of the 12,000-acre land bank to be around Rs 5,000 crore. Justice Agarwal acknowledged previous sales, stating, “We have managed to sell some small portions of GFIL’s land and have received part payment. This will also need to be ratified by the Supreme Court, along with Vavasi and Chadha groups’ applications.”
The Golden Forest Saga
Golden Forest India gained notoriety in the mid-1990s after raising Rs 1,000 crore from over 2.2 million investors across 11 states for investment in plantation schemes. The company subsequently defaulted on payments, prompting the Securities and Exchange Board of India (SEBI), having brought plantation schemes under its regulatory purview in 1997, to initiate legal proceedings against the company’s promoters, including chairman R K Syal. The case, after traversing various courts, eventually reached the Supreme Court. Four years prior, the apex court established a committee, chaired by retired Chief Justice RN Aggarwal. The other committee members represented the Reserve Bank of India and SEBI. The committee's mandate involved managing GFIL's assets, processing creditor claims, and ultimately auctioning off the assets for investor repayment.
Due Diligence and Funding Efforts
A banking source indicated that Vavasi Group is conducting due diligence on GFIL’s assets and engaging with various banks to secure the necessary funding for the acquisition. A questionnaire sent to Mr. Pitroda remained unanswered.