The Securities and Exchange Board of India (Sebi), the market regulator, announced on Monday that it would auction a property belonging to Kerala Housing Finance on June 4. The base price for the auction is set at Rs 55 lakh. The regulator is taking this action in an attempt to recoup outstanding dues. According to Sebi's statement, the property in question is a fully furnished apartment situated in Thiruvananthapuram, Kerala.
Kerala Housing Finance is accused of raising funds from investors by issuing securities without adhering to the necessary regulatory requirements. To facilitate the sale, the market regulator has enlisted the services of Quikr Realty Ltd. They will utilize the e-auction platform C1 India to conduct the auction.
Funds Raised Without Regulatory Guidelines
Sebi's order outlines that between 1999 and 2014, Kerala Housing Finance issued six series of guaranteed Non-Convertible Debentures (NCDs), labeled A through F, to 23,538 individuals which raised a total of Rs 158 crore. Furthermore, between 2014-15 and 2015-16, the firm distributed preference shares among 1,071 individuals, raising approximately Rs 19 crore, as documented in Sebi's order.
In August 2017, after receiving information from the National Housing Bank (NHB) concerning the company's non-compliance with regulatory requirements for raising public funds, Sebi issued an order. The order mandates Kerala Housing Finance, its founders and directors, to return the investor's capital, along with accumulated interest, within 180 days.
Auction Starts from June 2
In a public notice, Sebi invited prospective bidders to participate in the auction, beginning June 2. Potential bidders are required to submit an Earnest Money Deposit (EMD) equivalent to 10% of the reserve price for the listed property. This auction mirrors Sebi's ongoing attempts to secure the return of investor funds. The online auction is slated to run from 11 AM to 12 PM on June 4.
Sebi's notice also emphasizes the necessity of due diligence by potential bidders. It requires them to independently investigate any mortgages, lawsuits, or outstanding obligations associated with the property being auctioned before submitting a bid.
Following the auction's conclusion, the successful bidder must immediately deposit 25 percent of the winning bid amount, which includes the EMD already paid. The remaining balance, plus a poundage fee equaling 1 percent of the highest bid, must be submitted within 15 days of the auction closing.
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