After ₹82-crore acquisition, Canara Association mortgages Vikas College property for ₹40 crore

Title deeds deposited with Canara Bank days after association completed takeover of Vikas Education Trust assets

Mangaluru

Barely days after acquiring the properties and assets of Vikas Education Trust for ₹82 crore, the Canara High School Association mortgaged the property housing Vikas College to Canara Bank to secure credit facilities of up to ₹40 crore, according to registered documents.

The mortgage, created through a Memorandum of Deposit of Title Deeds, offers a glimpse into the financing arrangements that followed the acquisition of the educational institution and its assets by the century-old Canara High School Association.

The association had completed the purchase of the properties and assets of Vikas Education Trust on September 29, 2022, for a total consideration of ₹82 crore. Just over a week later, on October 7, 2022, the association deposited the title deeds of the property with Canara Bank’s Mid Corporate Branch in Hampankatta, Mangaluru, to create security for present and future credit facilities of up to ₹40 crore.

The memorandum recording the mortgage was subsequently registered in December 2022.

The mortgaged property comprises 3 acres and 61.13 cents of non-agricultural land in R.S. No. 7-1(P) of Padavu village, within the limits of the Mangaluru City Corporation. The property includes a multi-storey building situated along the KPT–Bondel Road, identified in the records as housing Vikas College.

The mortgage document was executed by the Canara High School Association through its Honorary Secretary, Manjeshwar Ranganath Bhat.

Under the arrangement, the property was offered as continuing security for credit and banking facilities extended by Canara Bank, up to a limit of ₹40 crore, excluding interest, discount, bank charges and legal expenses.

The document also placed restrictions on the association’s ability to deal with the property. During the currency of the mortgage, the association agreed not to create further encumbrances, sell or transfer the property without the bank’s prior written consent. It was also barred from creating a lease or tenancy over the property without the approval of the mortgagee.

The mortgage came shortly after the Canara High School Association took over the assets and properties of Vikas Education Trust, which had decided to sell its educational institutions after finding it difficult to manage and continue their operations.

The sale was approved by the trustees of Vikas Education Trust through a resolution passed on August 15, 2022. Three days later, on August 18, the Canara High School Association passed a resolution expressing its willingness to purchase the properties and continue the educational activities.

The sale deed records that the association paid ₹82 crore to Vikas Education Trust, represented by its then Managing Trustee and Chairman/President M. R. Krishna Palemar, a former Karnataka Minister.

Of the ₹82 crore, ₹10 crore was paid as advance consideration, while the remaining ₹72 crore was paid through a series of cheques.

The sale deed transferred the immovable properties as well as movable assets of Vikas Education Trust to the Canara High School Association. The property had originally been acquired by the government and allotted to the trust for educational purposes under Award No. 3/2001-02.

The subsequent mortgage means that the same property acquired as part of the ₹82-crore transaction was used as collateral to secure banking facilities of up to ₹40 crore shortly after the sale.

While the registered mortgage document does not by itself establish how much of the ₹40-crore credit limit was actually availed or how the funds were utilised, it confirms that the newly acquired Vikas College property was offered as security to Canara Bank within days of the completion of the ₹82-crore acquisition.

The association paid ₹8 lakh as stamp duty for the deposit of title deeds, apart from registration and other charges, according to the mortgage records.

Together, the sale deed and the subsequent mortgage documents trace a rapid sequence of events: the decision of Vikas Education Trust to exit its educational operations, the ₹82-crore acquisition by the Canara High School Association, and the deposit of the newly acquired property’s title deeds with Canara Bank to secure credit facilities of up to ₹40 crore.