Financial Daily from THE HINDU group of publications
Wednesday, Apr 24, 2002
Regulatory Bodies & Rulings
Hotel complex is property of Mashobra Resort: CLB
NEW DELHI, April 23
THE Principal Bench of the Company Law Board (CLB), while considering a petition filed by EIH Ltd against Mashobra Resort Ltd and the Government of Himachal Pradesh, has stayed the decisions taken at the board meeting of Mashobra Resort on March 7, 2002.
Recalling the facts of the case, the Bench noted that with a view to developing its property "Wildflower Hall", Shimla, into a five-star deluxe hotel, the Himachal Pradesh Government entered into a joint venture with EIH Ltd (Oberoi group) in 1995. The joint venture provided for the incorporation of Mashobra Resort (the respondent company) to develop and manage the proposed hotel, with the State Government owning 21 per cent stake.
By a letter dated March 6, 2002 the State Government informed EIH that the joint venture agreement stood automatically terminated with effect from October 13, 2001.
Exercising its power under Section 403 of the Companies Act, 1956, CLB said that the entire hotel complex would be treated as the property of the company and the company alone would have the right to the full usage of the hotel complex.
Disposing of the interim application, the Bench also directed for the reconstitution of the board of the company with four directors, two from the petitioners side (EIH Ltd) and two from the respondents (State Government). One of the nominees of EIH Ltd will be the managing director and that of the State Government's will be the chairman. The nominations should be forwarded to the company and the respective parties at the earliest and the first board meeting should be held latest by April 30.
Further, the managing director would be in charge of the day-to-day management and control of the company, the Bench said, adding that all policy decisions would be taken only at the board meetings for which seven clear days notice with agenda should be given to all directors.
Both the sides will be at liberty to bring proposals to the board and only unanimous decisions of the board will be implemented.
"As far as the shares of the petitioners are concerned, we do not propose, for the present, to give any directions, other than stipulating that none of the shares of the company shall be dealt with in any manner and that no general meeting of the company will be convened or held so that there will be no need to exercise voting rights," it said.
The Principal Bench of CLB, comprising the Chairman, Mr A.K. Banerji, and the Vice-Chairman, Mr S. Balasubramanian, also suggested to the Himachal Pradesh Government to consider divesting its stake in Mashobra Resorts for a consideration which could be based on the value of the land against which shares were issued.
"In case the Government is inclined to accept our suggestion of disinvesting the shares on the basis of the valuation of the land, the same may be reported to us on May 3," it said.
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