In a relief to Sahara, a US court has rejected a plea seeking to attach the Indian group's prized Plaza and Dream Downtown hotels here.
Hong Kong-based JTS Trading had approached the court seeking the attachment as part of its $350-million lawsuit against UAE-based Trinity White City Ventures, Sahara group and Swiss banking giant UBS over a deal that went sour.
While hearings will continue on the lawsuit, the Supreme Court of the State of New York has ordered that "the application of plaintiff JTS Trading Ltd for a pre-judgement order of attachment is denied".
Sahara, along with the two others, has been dragged into the lawsuit filed by JTS Trading, which claims that it had proposed to partner Trinity and arrange loans from UBS to acquire Sahara's three overseas hotels - Grosvenor House in London and the two in the US.
JTS has alleged that Trinity cut it off from the estimated $1.5 billion deal for direct negotiations with Sahara.
It accused Sahara and UBS of having "aided and abetted" the UAE firm in breaching its "fiduciary duties" under their agreement.
JTS also filed an application before the court seeking a 'pre-judgement order of attachment' of Sahara group's interest in the two hotels in the US. Seeking an immediate rejection of the attachment plea, Sahara submitted before the court that the "plaintiff is attempting to attach property that falls outside of the jurisdiction of this Court" and the assets did not belong to the parties of the case.
The Indian group also told court that it was wrongly dragged into the dispute between two entities -- JTS and Trinity -- over "a potential business relationship gone sour".
After looking into the oral and written submissions of JTS and Sahara in the matter, the court has now said in an order dated September 14 that "JTS fails to establish entitlement to attach assets of the non-parties".
"JTS' only claim in support of attaching non-party interests is that it is entitled to pierce the corporate veil to reach these assets," the court order said while adding that JTS however failed to establish an entitlement to pierce the corporate veil.
In its application, JTS had argued that Sahara India owns the Plaza and Dream Downtown hotels through a "convoluted chain of wholly owned and dominated alter-ego subsidiaries" and the group intended to sell these properties and repatriate the funds to India to use the money for securing release of the group's chief Subrata Roy from jail.
Sahara group however argued that JTS was seeking attachment of properties of 'non-parties' to the case against whom it had made no complaints.
Among others, JTS has filed the case against Aamby Mauritius (an entity from the Sahara group) and Sahara India Pariwar.
Opposing JTS' plea, Sahara further said it did not "meet the standard required to pierce the corporate veil, as JTS can not demonstrate that any subsidiary was used in the commission of a wrong that harmed the plaintiff".
Agreeing to Sahara's arguments, the court also ruled that JTS has failed to establish the entitlement to piercing the corporate veil and rejected the attachment plea.
Reacting to the lawsuit, Sahara Group had earlier said in a statement that "the lawsuit is brought against Trinity White City Ventures Ltd, which was apparently a potential joint venture partner of JTS Trading in a potential bid by Trinity to refinance our two hotels in New York and one in London."
"Sahara was at one time in discussions with Trinity but had no knowledge of the dealings between Trinity and JTS," the statement said.
"This is a private dispute between two parties who have had a falling out," Sandeep Wadhwa, Head of Corporate Finance at Sahara Group, had said in the statement.
"JTS' attempt to drag Sahara into this dispute is based on false allegations and we are confident that JTS's claim will not survive the preliminary stages of the proceedings. Sahara intends to defend the lawsuit vigorously," he added.
Sahara sources said this lawsuit will have no bearing on its fund-raising exercise. It last month announced that it has reached a deal with another party, Reuben Brothers, for transfer of its existing debt from Bank of China on the three hotels - thus averting a 'default-triggered' sale of the iconic Grosvenor House hotel in London.
The Grosvenor House hotel was put on sale by its lender Bank of China earlier this year after a 'technical default'.
Sahara Group has been trying to raise funds to secure release of its Chairman Subrata Roy, who has been lodged in Tihar Jail for over a year, through monetisation of its various assets, including the three overseas hotels that it had purchased between 2010 and 2012 for $1.55 billion.
The group has been engaged in a legal battle with markets regulator Sebi for a long time over a case involving raising of funds from investors to the tune of over Rs 24,000 crore or Rs 240 billion.
Sahara, however, claims that it has already repaid 95 per cent of the investors money directly.
Meanwhile, the Sahara group welcomed a US court's order that rejected the plea for attachment of its two hotels in New York and said it was "unfairly" dragged into a private dispute between two parties.
The Supreme Court of the State of New York has rejected a plea by Hong Kong-based JTS Trading Ltd that had sought attachment of Sahara's prized hotels Plaza and Dream Downtown in the US as part of a lawsuit over a deal that went sour.
"We welcome the Hon'ble Supreme Court's decision which understood our claims in the pious light of justice and protected us from becoming a victim of unscrupulous litigation which aimed at falsely and unfairly dragging us into a private dispute between two parties who have had a falling out," a Sahara group spokesperson said in a statement.
Hong Kong-based JTS Trading had approached the court seeking the attachment as part of its USD 350-million lawsuit against UAE-based Trinity White City Ventures, Sahara group and Swiss banking giant UBS over a deal that went sour.
JTS Trading had filed the suit in June, claiming that it had a deal under a joint venture with Trinity for a deal of the hotels and that it was abruptly excluded when Trinity decided to partner with Sahara.
Sahara however told the court that it was being unfairly dragged into a private dispute between JTS and Trinity, as it was a non-party to the dispute.
Sahara claimed JTS had no rights to attach the interests of Sahara's subsidiary non-party entities (Sahara Plaza LLC and Sahara Dreams LLC), which were accepted by the court.
JTS Trading was apparently in a potential joint venture in a potential bid by Trinity to refinance Sahara's two hotels in New York and one in London (Grosvenor House). Sahara was at one time in discussions with Trinity for a refinancing deal, but said it had no knowledge of the dealings between Trinity and JTS.
JTS had alleged breach of the prior joint venture and sought $350 million as damages and attachment of Sahara's two US hotels.
The Court however said in its order, dated September 14, that JTS has failed to establish entitlement to attach the assets of the non-parties.
While accepting Sahara's contentions in the matter, the court ordered, "Accordingly, JTS's application for a pre-judgment order of attachment, and all of JTS's alternate grounds for relief, must be denied."
Image: The Plaza Hotel in New York Photograph: Lucas Jackson/Reuters
