A petition has been moved in the NCLT with regards to a dispute between two brothers, Ashok K. Mittal and Ram Parshottam Mittal ‘R.P. Mittal’ over the shareholding, management and control of Hotel Queen Road Private Limited ‘HQRPL’ which owns a hotel property known as “Hotel Royal Plaza” in the national capital.
The petition seeks to affirm that HQRPL is a public company.
It also seeks to declare that the removal of R.P. Mittal and Sarla Mittal from directorship in the EOGM is legal and valid.
Also, and the rights issue in July, 2009 was legal and valid. R.P. Mittal received notice to subscribe for shares. They voluntarily declined to buy shares so R.P. Mittal group cannot be permitted to challenge the rights issue.
Since, January 14, 2009, Ashok K. Mittal group is in control and management of HQRPL, having 91.76 per cent shares. R.P. Mittal group is in minority having only 8.24 per cent shares.
In 2002, in terms of the disinvestment plan of ITDC, a demerger scheme was approved vide which the hotel property was transferred to a newly incorporated company, HQRPL.
On September 30, 2002, HQRPL (which was then under the control of the Government/GOI) convened an EOGM where a special resolution was passed for converting the company into a public limited company).
In January, 2009, when Ashok Mittal got control over HQRPL, the company’s account had been declared as NPA and the bank account had only Rs 2.82 lakhs.
The rooms of the hotel were not up to the mark and neither did the hotel have good banquet hall or swimming pool or a gym.
As the ASIAD games were approaching, the hotel required renovation and upgradation to meet the international standards.
Looking into the dire need of funds, HQRPL decided to conduct rights issue of shares and accordingly gave an offer letter dated September 30, 2009.
Even though the market value of shares was ascertained as Rs 143 per share by a Valuer, HQRPL offered the shares at a reasonable value of Rs 40 (10+30) each.
R.P. Mittal filed an application being seeking a stay on the Rights Issue.
The High Court, vide order dated August 18, 2009 refused to stay rights issue and observed that rights issue is for benefit of the company, the rate at which shares are being offered is way less than the market value.
The court observed that if R.P. Mittal subscribes then it would continue to be a dominant shareholder and if R.P. Mittal chooses not to subscribe then the said act would be a result of his own volition.
The high court was of the view that there was nothing illegal or reprehensible in the proposed offer of rights issue.
More than 14 years have already passed since rights issue took place in HQRPL.
The funds brought in through rights issue have been utilized to clear debts of HQRPL.