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Palm Beach Resort accuses SBI of "predatory foreclosure"

Shahudha Mohamed
09 October 2020, MVT 13:58
Palm Beach Resort and Spa. The resort has accused the State Bank of India (SBI) of unlawful foreclosure of the resort. PHOTO: MIHAARU FILES
Shahudha Mohamed
09 October 2020, MVT 13:58

Palm Beach Island Resort and Spa on Thursday publicly raised several allegations, including foregoing best practices, malice, and "predatory foreclosure", against State Bank of India (SBI).

According to Palm Beach Resort, SBI followed an unlawful foreclosure process, while the resort had come to an out-of-court agreement with the bank, to prevent losing the mortgaged resort to the bank.

Noting that the resort had already placed a deposit per the aforementioned agreement, Palm Beach stated that the bank had, however, chosen to go back on their word "and are now invested in imposing unfair and unlawful amounts' atop applicable charges in an apparent effort to frustrate attempts by the mortgagor to settle accounts".

The resort accused that SBI breached their out-of-court agreement in an attempt to secure benefits for a third party.

"The resort highly condemns this unlawful and predatory 'pound of flesh' attitude and demeanour employed by the bank as well as its senior officers in violating our agreement and hence, beseech the authorities involved to intervene accordingly", Palm Beach declared.

"As we genuinely feel that the bank has demonstrated malice, by moving against letting the mortgagor settle all dues, we cannot help but be further convinced given the circumstances and facts at hand, that elements of impropriety, corruption and secret profit are likely at play in an attempt to collect unlimited interest many folds multiplied".

Noting that the bank has refused to disclose the "secret" valuation for the purpose of "concealing and devastate the fair value of the property", the resort highlighted that this practice is prohibited by Indian laws and judicial precedents.

"Best practice and law require a fair valuation [to] be undertaken and shared with the mortgagor. We have pleaded with the bank with and brought this matter to their attention numerous times, highlighting that a faulty valuation would only produce a faulty process", Palm Beach noted.

"Thus, it is clear that the rights of the Resort are being ravaged unlawfully".

Further accusing the bank of acting as if "there are no regulations or policies on foreclosures or its applicable processes", the resort claimed that the bank only stands to gain and has been continually gaining profits from these same business practices.

"We wish to bring the aforementioned to the attention of the public, with the intention of ensuring borrowers and mortgagor amongst us are made aware of the potential risk or dangers that they may likely face".

Palm Beach Resort and Spa warned individuals and companies to ensure that the instruments placed with SBI details all the processes in cases of foreclosure, "because at present, there is absolutely no protection for mortgagors in these cases".

SBI on October 15 announced the auction sale of the mortgaged Palm Beach Resort to recover dues for the loan, noting that the move was authorised by the Civil Court.

With a reserve price of USD 15.3 million (MVR 235.9 million), SBI stated that the resort's auction is open for both local and international bidders, with applications available on SBI Maldives' website: Applicants are also required to provide USD 15,000 as Earnest Money Deposit (EMD), along with the bid application.

Regarding the accusations levied by Palm Beach Resort, the State Bank of India has yet to issue a statement.

The Edition first reached out to SBI on October 9 with queries concerning the matter but did not receive a formal response to the allegations, aside from the auction sale notice.

Editor's Note: This article was updated on October 18, 2020, to include SBI's sale notice of Palm Beach Resort. It was again updated on December 2, 2020, to add link to court verdict on the resort sale.

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