ITC had moved SAT after capital markets regulator Securities and Exchange Board of India rejected its demand that Leela’s assets shouldn’t be sold to Brookfield because the deal violated rules on related-party transactions.
Related-party transactions mean deals between “a listed entity and a related party” and contracts of “a company with a related party”, and none of the transactions here come under these definitions, the appellate tribunal ruled.
ITC’s arguments — that additional arrangements such as sale of trademark and offering of services among Leela promoters, JM Financial and Brookfield should be considered as related-party transactions — also do not hold merit, SAT said.
ITC, which holds an about 8% stake in Leela, plans to challenge SAT’s order in the Supreme Court.
The respondents, including Hotel Leelaventure, its promoters and shareholder JM Financial Asset Reconstruction Company (ARC) also plan to file a caveat petition, so that they get a chance to put forth their arguments if ITC approaches the top court.
Leelaventure has been trying to sell assets to reduce debt, which totalled Rs 3,781crore at the end of fiscal 2018. In March this year, it announced that Canadian alternative asset management company Brookfield had agreed to purchase its hotels in Delhi, Bengaluru, Udaipur and Chennai for Rs 3,950 crore, in one of the biggest foreign investment proposals in India’s hospitality sector.
ITC, which too owns several hotels, then approached the National Company Law Tribunal and Sebi, challenging the deal.
The markets regulator had asked Leelaventure to conduct a shareholder vote on the deal. ITC oppo-sed this as well, first before Sebi and then SAT, where it sought a stay on the postal ballot or keeping the final outcome of the votes on hold till the tribunal gave its order.
On Thursday, the appellate tribunal presided over by Justices Tarun Agarwala, CKG Nair and MT Joshi rejected ITC’s plea.
Soon after the SAT order, Leelaventure announced the result of the postal ballot on the stock exchange that showed over 89% voting in favour of the asset sale. In April, ET reported that a majority of the shareholders had voted for the deal.
Senior lawyers Darius Khambata and Somasekhar Sundaresan appeared for ITC. Senior counsel Janak Dwarkadas, along with Tomu Francis of Khaitan & Co, represented JM Financial ARC. Senior counsel Navroz Seervai appeared for Leelaventure along with law firm Veritas Legal. Senior counsel Ravi Kadam appeared for the promoters.
Sebi was represented by Mihir Mody of K Ashar & Co.
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1 Comment on this Story
sasikumar255 days ago
Diwali is in anyway the peak of all celebrations; let the dealers also be a part of it.