LI Network
Published on: November 19, 2023 at 16:05 IST
A dispute between two brothers, Ashok K. Mittal and Ram Parshottam Mittal ‘R.P. Mittal,’ regarding the shareholding, management, and control of Hotel Queen Road Private Limited (HQRPL), which owns the renowned “Hotel Royal Plaza” in the national capital, has escalated to the National Company Law Tribunal (NCLT).
The petition filed in the NCLT aims to establish that HQRPL is a public company and seeks a declaration affirming the legality and validity of the removal of R.P. Mittal and Sarla Mittal from directorship in the Extraordinary General Meeting (EOGM).
Additionally, it asserts that the rights issue in July 2009 was legal and valid. The petition argues that R.P. Mittal’s group, having received notice to subscribe for shares, voluntarily declined, preventing them from challenging the rights issue.
As of January 14, 2009, the control and management of HQRPL have been in the hands of the Ashok K. Mittal group, which holds a significant 91.76% of shares, while the R.P. Mittal group is a minority shareholder with only 8.24% of shares.
In 2002, as part of the disinvestment plan of the India Tourism Development Corporation (ITDC), a demerger scheme was approved, resulting in the transfer of the hotel property to the newly incorporated HQRPL.
Following this, on September 30, 2002, HQRPL, then under government control, held an EOGM where a special resolution was passed to convert the company into a public limited company.
In January 2009, when Ashok Mittal assumed control of HQRPL, the company’s accounts had been declared as non-performing assets (NPA), and the bank account balance was a mere Rs 2.82 lakhs.
The hotel faced challenges with subpar rooms, lacking facilities such as banquet halls, swimming pools, and gyms. With the approaching ASIAD games, renovations and upgrades were imperative to meet international standards.
To address the financial need for renovations, HQRPL decided to conduct a rights issue of shares, offering them at a reasonable value of Rs 40 (10+30) each, despite a market valuation of Rs 143 per share. R.P. Mittal sought a stay on the rights issue, but the High Court, in an order dated August 18, 2009, declined to intervene, emphasizing that the rights issue was for the benefit of the company.
Now, it is more than 14 years since the issue, the dispute over control and management continues, with the funds raised through the rights issue having been utilized to clear debts of HQRPL.