Solomon & Co, which advised Khaleeji Commercial Bank in its funding of a ₹500 billion (US$7 billion) township project, had to work within the Shariah law framework to meet the bank’s requirements.
The Bahraini bank provided the funding for a mega township project near the upcoming international airport in Navi Mumbai. “One of the key challenges associated with the deal was to ensure that the documentation was compliant with Shariah law, as this was one of Khaleeji Commercial Bank’s prerequisites,” Aaron Solomon, the managing partner at Solomon & Co, told India Business Law Journal.
The firm encountered several other challenges on the deal including finding ways around the restrictions on foreign direct investment (FDI) in India’s real estate sector, obtaining permission and approval for the purchase and conversion of agricultural land from villagers in Maharashtra, and the repatriation of FDI.
The project, jointly undertaken by Bhumiraj Group, Valuable Group and the special purpose vehicle of Khaleeji Commercial Bank, will be developed in phases over a 10-12 years period. Valuable Group is also investing in the project. The township will see the development of 422 acres of land, which will include residential units, commercial units and approximately 200,000 affordable housing units along with social and entertainment infrastructure.
Solomon & Co advised on the verification of the title and issuance of title due diligence, and drafting of the development agreement with Bhumiraj City and Valuable Group. It also guided the bank on compliance with the Real Estate (Regulation and Development) Act, 2016, the waterfall mechanism relating to the distribution of sale proceeds, area sharing, direct and indirect tax implications including goods and services tax, along with strategic advice on structuring the transaction and repatriation of foreign direct investment.
The Solomon & Co team was led by associate partner Saurabh Gupta and associates Rajesh Khaire and Aakash Valappil.
Independent lawyer Sameer Pendse advised Bhumiraj Group.