A portion of Quality Inn Aruna hotel will go under the hammer on March 13.

According to a sale notice issued by Punjab National Bank under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, the bank has taken symbolic possession of the property and proposed to sell it through e-auction. This is to realise the secured debts due to the bank amounting to ₹11.28 crore as on January 31, 2015.

The portion that was taken possession by the bank is the annexe, which has five floors (ground + four floors) of 6,600 sq ft each, according to sources. The bank has fixed the total reserve price at ₹27.30 crore.

The property, which is mired in legal issues, is owned by Aruna Hotels Ltd, a listed entity.

Last year, the promoters entered into an agreement with a property developer KGEYES Builders for a joint development of the property into a “lucrative and new type of hospitality business”.

After a major shareholder in the company, Subasri Realty Pvt Ltd, challenged the proposal, the Company Law Board granted an interim stay on the proposed joint development of the property. In its interim order on April 9, 2014, the CLB advised the respondents, including M Shivaram, Chairman and Managing Director of Aruna Hotels; Kartick Shivaram, Executive Director; and the Directors S Kalyanam, CL Ravichandran, and Kamal Babbar, to refrain from selling or creating any third party interest in the property.

Kamal Babbar, another major shareholder and one of the respondents, too, separately obtained a stay from the Madras High Court against the proposed sale.

The nearly 1.2-acre property, located in a prime location in the city, also includes a 65,000-sq-ft main building that has 96 rooms and a coffee shop. The market price of the entire property is estimated at ₹250 crore, sources said.

The company has more than 24,000 public shareholders, including mutual funds, banks, insurance companies and foreign institutional investors.

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