Shimla, April 20
The Himachal Pradesh Government has suffered a severe jolt with the Company Law Board (CLB) finally staying the termination of its joint-venture agreement with East India Hotels (EIH) of the Oberois in the Rs 100-crore Wildflower Hall hotel here.
The CLB has suggested that the government should consider disinvesting the shares held by it in the hotel. The interim order of the CLB came yesterday following a nearly 45-day controversy over the virtual throwout of the Oberois from the prestigious Wildflower Hall by the BJP-HVC combine government headed by Mr P.K. Dhumal.
The CLB has ordered a stay on all decisions taken at the board meeting on March 7 when the agreement was terminated by government-nominated members on the Board of Directors of Mashobra Resorts which is running the five-star deluxe hotel. None of the directors of the EIH was present at the meeting.
The CLB, in exercise of its powers under Section 403 of the Act, ordered that the entire hotel complex would be treated as the property of Mashobra Resorts which alone would have the right to the full usage of the hotel complex.
The Board of Directors of Mashobra Resorts would be reconstituted with four directors, two each from the government and the EIH. One of the nominees of the EIH would be the Managing Director of the resort and a representative of the government would be the Chairman. The nominations should be forwarded to the company and the first board meeting should be held latest by April 30.
The CLB ordered that the Managing Director would be in charge of the day-to-day management and control of the
company. All policy decisions would be taken only during the board meetings for which a seven-day notice with the agenda should be given to all directors.
The CLB observed that the disputes between the two parties deserved to be settled amicably. Even assuming that the government had acted in accordance with the law in issuing the termination notice and taking over the shares of the EIH, the CLB felt that it would not be in the interests of the government to run the hotel on a long-term basis, especially when the hotel had a liability of over Rs 50 crore. In view of the strained relationship between the parties, it might also not be possible for them to carry on together. Under the circumstances, the CLB suggested that the government should consider disinvesting the shares held by it in the company for a consideration which could be based on the value of the land against which the shares were issued.
The CLB said in case the government was inclined to accept the suggestion of disinvesting the shares on the basis of valuation of the land, the same might be reported to the CLB on May 3 at 2.30 pm. In that case, it would be in the interests of the petitioners also to agree to the suggestion so that they could become the exclusive owner of the company and if both parties agreed, the CLB shall appoint an independent valuer to value the land on that day.
The CLB did not give any directions on the shares of the EIH
which were transferred to the government on March 7. But it stipulated that none of these shares shall be dealt within any manner and that no general meeting of the company would be convened to ensure that there was no need to exercise voting rights on the shares.
The CLB was of the prima facie view, even assuming that the state government had the right to the shares of the petitioners in terms of the joint venture, that the property of the company could not be taken over by the government, especially when there was a huge liability against the company.
It has been observed by the CLB that there is prima facie justification in protecting the interests of the petitioners (EIH and others) and that the “balance of convenience” is in their favour. It is not in dispute, as seen from the copies of various board minutes, that the affairs of the company had been carried on by both parties amicably during the past six years. More than 25 board meetings were held without any dissent from either side indicating that neither of them had any grievance against each other.
