Group which owns Orchid and VITS owes over Rs 100 cr to banks; high court asks firm for credit card revenue accrued.A consortium of financial institutions has sought the Bombay High Court’s intervention in recovering dues in excess of Rs 100 crore accrued from debts advanced to the well-known chain Kamat Hotels India Limited. The hospitality group, which runs the country’s first ecotel – Orchid, located near the domestic airport – and VITS, which is in the vicinity of the international airport, has told the court it is strapped for cash, with barely enough funds to keep these two institutions running.Justice Gautam Patel, who is hearing the case, has directed KHIL to deposit with the court those proceeds that result from credit card transactions conducted through American Express, Visa and Master Card. The HC will then accumulate this money in fixed deposits until such time that the issue is settled.This is in keeping with the arrangement between KHIL and the lending institutions; the hospitality group was to repay the banks by depositing proceeds of credit card transactions in two different escrow accounts in Canara Bank and HDFC Bank.The case before court pertains to loans taken by the company from a consortium led by Infrastructure Leasing and Financial Services Ltd (IL&FS) and Canara Bank – under the consortium as well as separately.The consortium – which chose IL&FS as its “facility manager” – had advanced a loan of over Rs 87 crore to KHIL, and Canara Bank lent the group over Rs 100 crore. IL&FS has petitioned the court to help in the recovery of money owed to it, amounting to almost Rs 19 crore, as on March 31 this year. It has sought annual interest of 14.25 per cent on the amount. While Canara Bank has disclosed in an affidavit filed in the HC that it has initiated separate proceedings against KHIL – further details of which are not available. Hotel VITS, which has 190 rooms and is designated a four-star property, has been hypothecated to Canara Bank for this loan and the bank holds first charge over the hotel. Hotel Orchid offers 240 rooms. The string of city restaurants which bear the Kamat label is not associated with KHIL.According to the proceedings filed in the HC, IF&FS and nine other public sector unit banks had advanced KHIL the loan under an agreement signed in 2011 for capital expenditure and servicing of certain other debts. The hospitality group ceased to deposit money in these accounts in May 2014 and opened a separate account at Axis Bank and began to deposit money in that institution instead.The court has directed that this money – Rs 1.58 crore – be deposited with the HC department. The court was also informed by KHIL that they are “trying to sell Hotel VITS so as to ease pressure on their finances”. A public notice to that effect has already been issued in certain newspapers.According to the suit filed by IL&FS, through the law firm Manilal Kher Ambalal and Co., KHIL had, in documents signed after the loan agreement, agreed to hypothecate the Hotel Orchid to the lenders – on which IDBI and L&T Finance already held a charge. The suit seeks that if KHIL were to skip payment, the assets hypothecated be sold and the proceeds be used to recover their dues.The suit states that the owner of KHIL, Vithal Kamat and his son Vikram Kamat, served as guarantors to the loan, but “did not pay any heed” to letters sent by the consortium after the loan conditions were breached.Kurian Chandy, the Chief Financial Officer of KHIL, who is also the person who has filed affidavit in HC, told Mumbai Mirror, “We are managing the day to day operations with some external support.” He refused comment on the suit, denying knowledge of any proceedings filed by any bank other than IL&FS against the company.In his affidavit in HC, Chandy has blamed IL&FS for not providing the loan promised to KHIL, of Rs 120 crore, and thereby negatively impacting the hospitality group’s debt restructuring plan. The affidavit also indirectly blames IL&FS for a fractured deal to sell VITS in May 2012. It claims that since KHIL was unable to pay its creditors at that time, the prospective buyer for VITS backed out of the deal, which would have fetched the group around Rs 225 crore. IL&FS denies these contentions.The court is likely hear the case later this month.Pic: Orchid, located near the domestic airport, is India’s first ecotel; (R) Vithal Kamat owns Kamat Hotels India Limited