The Delhi high court has ordered status quo in a dispute between two brothers for management of Hotel Ashok Yatri Niwas, one of the hotels sold off by the previous NDA regime in 2002 as part of its disinvestment programme.
The court's directions followed an appeal by the younger sibling R P Mittal challenging an order of the Company Law Board to allot additional shares in the hotel to his brother Ashok Mittal. The court has asked New York-based Cendant Hotel Group International, world's largest lodging franchiser with 6,400 hotels under its banner, not to acquire any equity in the hotel till the matter was disposed off.
The 300-room hotel was earlier run by state-owned Indian Tourism Development Corporation and was sold for Rs 45 crore (Rs 450 million) in 2002 to Moral Trading Investment Ltd, a company promoted by the two brothers.
Besides, Ashok Yatri Niwas, the NDA government had sold off the adjacent Hotel Kanishka (now renamed Hotel Shangri La) and Mumbai's Centaur hotels among others.
The hotel, which is being renovated at present, was closed down by R P Mittal in 2003 on grounds that it was incurring losses.
The dispute arose after Ashok Mittal and Malaysia-based real estate firm Hilcrest Realty, which partly funded the deal and had 8.5 per cent equity in the new firm Hotel Queens Road Ltd, alleged that R P Mittal had 'illegally' increased the authorised capital and 'raised' his own share in the new firm.
During the proceedings in high court, senior BJP leader and Ashok Mittal's counsel Arun Jaitley contended that R P Mittal wanted to transfer the hotel's ownership to Cendant, although the US firm denied the allegation.
Appearing on behalf of Hilcrest Realty and Ashok Mittal, senior counsel U K Chaudhary contended that R P Mittal had illegally allotted 41 lakh shares of Hotel Queens to himself, his wife Sarla Mittal and Moral Trading.
Further, Chaudhary alleged that R P Mittal called an extraordinatry general meeting of shareholders and illegally increased the authorised capital of Hotel Queens.
R P Mittal illegally transferred to himself the shares of Hotel Queens held by Moral Trading, Chaudhary said.
After Hilcrest Realty came to know of the development, it called an EGM to remove R P Mittal and his wife from the company and served a notice on them, Chaudhary claimed.
However, R P Mittal filed a suit in Delhi High court against the notices issued by the Malaysian company.
Later, Hilcrest and Ashok Mittal knocked the Company Law Board alleging oppression and mismanagement of the company under Section 397 and 398 of the Company Act.
Although the CLB rejected their petition, it directed Hotel Queens to allot additional shares to Ashok Mittal.
Challenging the CLB order, R P Mittal moved high court, which has now given a stay order.
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