ITC asked to prove eligibility for its Leelaventure plea to be heard

The National Companies Law Tribunal (NCLT) has scheduled the ITC  hearing for June 18 and has asked the company to prove its eligibility to be heard in the petition alleging oppression and mismanagement against Leelaventure, but ITC cannot buy shares from the open market in the interim to prove its point in the next hearing or partner with another minority shareholder to show they qualify jointly, lawyers familiar with the matter said.

ITC currently holds a 7.92% stake in Leelaventure. To be heard for a petition, citing oppression and mismanagement, the petitioner must have 10% of the issued share capital of a company under Section 244 of the Companies Act or have about 100 shareholders or one-tenth of the total number of shareholders making the petition.

Lawyers said if LIC, which has a 2.38% stake in Leelaventure and has separately complained to Sebi, or any other minority shareholder sides with ITC in the interim to claim they jointly qualify, they will have to file a fresh petition. ITC, which holds a 7.92% stake in Leelaventure cannot buy from the public markets as NCLT will take into account its stake at the time of filing the petition. Meanwhile, Brookfield Asset Management Company has filed an application with the NCLT to make them a party to the ITC petition. Brookfield is currently not a respondent in the petition. “The deal is safe. Sebi has just asked Leela to hold on. While it’s true that the transaction may take more time than what we had anticipated, it will go through,” said a person involved in the deal. ETwas the first to report that Brookfield and Leela were in advanced talks for a deal in its September 3 edition. On Wednesday, in a BSE filing, Leelaventure said Sebi had asked the chain to hold off the deal with Brookfield as it was in receipt of complaints alleging violations from minority shareholders ITC and LIC.

“Section 244 provides the minimum criteria – 10% of the entire shareholding in the company or the number of members. The company’s shareholding on the date of moving the application is what counts. Shareholders can file such petitions collectively, but this was a petition that was filed by ITC. They may withdraw that petition and seek the liberty of the court to move a fresh application in which either they will buy more shares and cross that threshold or aggregate with another party to become eligible,” said a lawyer. The firm could also move NCLAT or the SC if they fail to get a waiver in NCLT, lawyers said. Previously, a waiver of 10% had been granted to Cyrus Mistry in the Cyrus Mistry Tata Sons case.

“Cyrus Mistry, through his companies, held 18% of equity capital in Tata Sons. But the section talks about total share capital which includes preference share capital as well. If you talk of preference shares, they did not cross the threshold of 10%. On that ground, that application was rejected by NCLT Mumbai bench. They appealed to NCLAT and the tribunal saw there were certain extenuating circumstances which make them eligible. So they said we are waiving the eligibility criteria for you and we permit you and that your application be decided and heard on merit by NCLT. The matter was remanded to NCLT by NCLAT,” said a lawyer.

Source:-https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/itc-moves-nclt-against-hotel-leelaventure/articleshow/69006386.cms

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