MUMBAI: Capital market regulator, Securities & Exchange Board of India (Sebi), has informed the dedicated bankruptcy court that it will take three more months to complete its probe into the deal between Canadian investor Brookfield and Hotel Leelaventure.
On Monday, the Sebi counsel informed the Mumbai bench of the National Company Law Tribunal (NCLT) that the regulator had initiated the inquiry in April and it needs three more months to be over.
However, the NCLT bench, presided over by MK Shrawat and Ravikumar Duraisamy, asked Sebi to complete its inquiry sooner than that time and have adjourned the matter to July 25.
“All the information as sought by Sebi has been provided by Leela and JM financial. In view of the injunction order passed by the Sebi, the deal with Brookfield is stalled and cannot be acted upon and earlier hearings were also deferred because of these peculiar circumstances,” argued Ashish Pyasi, an advocate at law firm Dhir and Dhir Associates, appearing for Hotel Leela. “On the last date of hearing, Sebi was directed to complete its examination in the complaint by ITC against Leela and Brookfield proposed transaction, however the same has not been done so far and the last order of NCLT was duly intimated to Sebi.”
While Rohit Gupta, counsel for JM Financial ARC, argued that these proceedings (NCLT) are independent and the issue which has to be decided by the Sebi is not a serious fraud investigation that could need so much time. On May 25, the tribunal had asked Sebi to complete its inquiry within six weeks so that it can hear the case.
Currently, BSE-listed Hotel Leela is facing two separate cases in the tribunal. The first case has been filed by the JM Financial ARC under the insolvency resolution after the company failed to repay its dues. Another case is filed by the tobacco-to-apparel maker conglomerate ITC, who is also a minority shareholder in the company, for alleged oppression and mismanagement.
Along with LIC, which holds a 2.38% stake, ITC also approached Sebi, alleging that the deal violated rules on related-party transaction. Following the complaints, the Sebi has directed parties to hold the transaction.
ITC is seeking a waiver on equity-ownership threshold to be eligible to file a case against the embattled provider of luxury leisure accommodation. Under the law, to be eligible to file a case for oppression and mismanagement, ITC must own at least 10% in Leela. ITC owns 8.27%.
Source- Economic Times.