ITC Moves NCLT Against Hotel Leela Venture, Accuses It Of Oppression And Mismanagement
“ITC, through their advocates, today mentioned the matter at 10:30 a.m. before the NCLT, Mumbai Bench. The learned bench of NCLT has placed the said application for hearing tomorrow,” Hotel Leela Venture said in an exchange filing.
Section 241 of the Companies Act, 2013 allows a member to file an oppression and mismanagement petition on grounds that the affairs of the company are being conducted in a manner prejudicial to the company, any other members or public interest, among other reasons. Such an application can also be filed over change in the board of directors of a company, leading to its affairs being conducted in a manner prejudicial to its own or its members' interest.
To file such an application, the petitioner must have one-tenth of the issued share capital of a company or represent 10 percent of the total number of members.
The Indian tobacco giant owns 7.92 percent of the Hotel Leela Venture's total shareholding as of March-ended quarter. And so, it has asked the tribunal for a waiver of the required minimum threshold of 10 percent shareholding, according to the filing. The company’s other public shareholders include JM Financial Asset Reconstruction Company Ltd., which holds 26 percent stake.
ITC’s petition comes after JM Financial ARC administered a Rs 3,950-crore deal involving the sale of five Leela hotels in Bengaluru, Chennai, Delhi, Udaipur and Agra to a Brookfield-sponsored private real estate fund, in March. All intellectual property owned by Hotel Leela Venture was part of the deal and the intellectual property owned by promoters was also to be sold to Brookfield for Rs 150 crore.
JM Financial ARC in February had filed a petition with the NCLT against the company under the Insolvency and Bankruptcy Code. In September 2012, Hotel Leela had restructured its debt under the corporate debt restructuring mechanism. In June 2014, its erstwhile lenders, with over 95 percent of the hotel operator's debt, had assigned their debt to JM Financial ARC, and one lender with exposure of about 1 percent.
The company’s debt, according to its annual report for 2017-18, was nearly Rs 3,800 crore. Founded in 1983 by Captain CP Krishnan Nair, at the age of 65, Hotel Leela Venture currently has only one property left, in Mumbai—incidentally the first property it opened.