THE ownership dispute between buyers of Ashok Yatri Niwas has reached the Supreme Court. Its promoter RP Mittal has moved the apex court against Hillcrest Realty seeking order to restrain the Malaysiabased firm from exercising voting right and taking over the management and control of the hotel, now called Hotel Queen Road.
A bench comprising Justice SH Kapadia and Justice Aftab Alam referred the matter to be taken up by an appropriate bench. Inaccordance with the government’s divestment plan, ITDC-owned Ashok Yatri Niwas was auctioned in 2002. RP Mittal’s Moral Trading acquired it for Rs 45.03 crore. Hillcrest Realty invested Rs 28.29 crore in preference share in Hotel Queen Road, the special purpose vehicle floated by Moral Trading.
However, differences arose between the parties. Hotel Queen approached Delhi High Court seeking order to restrain Hillcrest from exercising voting rights on preference shares.
On Jan 14, 2009, the high court said the Malaysian firm was entitled to voting right. The high court also handed over the management of the hotel to Hillcrest Realty and RP Mittal’s younger brother Ashok Mittal who had accused him of illegally increasing his shareholding in the company.
RP Mittal and his wife Sarla Mittal approached the Supreme Court against the high court order. Whether the management and control of the Hotel Queen can be taken away from the hands of the equity shareholders and handed over to the preference shareholders? It is a substantial question of law to be decided by the apex court, said Mr Mittal in his special leave petition filed through counsel EC Agrawal.
“In corporate law, it is always equity shareholders who have the statutory voting right and the right to decide the composition of the board. The preference shareholders do not have any voting right and are virtually debtors of the company whose debt is liable to be statutorily and compulsorily redeemed under section 80 of the Companies Act,” said the petitioners.
The petition also said: “The preference shares do not carry any voting rights. The preference shareholders have no right to manage and control the company. The hotel has been in exclusive management and control of the petitioners (RP Mittal and his wife Sarla Mittal) right from the inception and the petitioners with their efforts and investments have brought about key changes in the hotel which was in shambles and was not earning any profit. It has now started operating after a tie-up with Ramada Plaza.”
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