Telangana HC Fines Maha Hotels

Hyderabad: The Telangana High Court imposed exemplary costs of Rs.10 lakh on Maha Hotels Projects Ltd, Maharashtra, while dismissing its writ petition challenging the state government’s decision to grant consent for the transfer of the Golden Jubilee Hotels Private Limited (Trident Hotels at Gachibowli) to a new investor under an insolvency resolution plan.

Maha Hotels, mentioned as a venture company of My Home Group, in 2008 won the bid to be the lead developer of a consortium to develop, finance, build, operate and transfer a five-star hotel on land leased by the Telangana tourism department and Shilparamam Arts Crafts and Cultural Society, against payment of a monthly lease and development premium.

After the venture defaulted on its payments, several banks moved the National Company Law Tribunal (NCLT) for initiating insolvency resolution against Golden Jubilee Hotels. East India Hotels Private Ltd (Oberoi group), which was managing the Trident Hotel, also moved court.

Later, private equity giant Blackstone Group Inc. said it had received court approval to acquire the debt-laden Trident Hotel for Rs.584 crore. The Telangana government’s empowered committee (tourism), comprising the Deputy Chief Minister and finance minister, the tourism minister and the industries minister was tasked with taking a decision on the representation for taking over the project. On September 25, the committee decided to issue a no-objection certificate in favour of the successful resolution applicant — BREP Asia II Indian Holding Co. (NQ) Pte Ltd, (Blackstone).

Challenging the committee decision, Maha Hotels approached the High Court to declare it as arbitrary. Maha Hotels’ contention was that its alleged accrued rights as lead developer could not be extinguished without due process or compensation. It also claimed that permitting 100 per cent foreign direct investment in Golden Jubilee Hotels Pvt. Ltd by the resolution applicant violated the Consolidated FDI Policy of India, and sought directions to the Reserve Bank of India and the Union of India not to permit such investment.

Justice Nagesh Bheemapaka held that the petition was devoid of merit and amounted to abuse of the court’s jurisdiction, particularly in view of the extensive litigation already adjudicated by the National Company Law Tribunal (NCLT), the National Company Law Appellate Trinunal (NCLAT), the High Court, and the Supreme Court on related issues. The resolution plan submitted by Blackstone was approved by the NCLT in February 2020 and upheld by the NCLAT and the Supreme Court.

The court said that the state government’s consent for shareholding change was mandated by the approved plan and the empowered committee had taken a decision on the matter. Justice Bheemapaka pointed out that the petitioner, having repeatedly failed before multiple forums could not revive settled issues through a writ petition.

Concluding that the litigation was frivolous and obstructive, the court dismissed the petition with costs of `10 lakh, payable to the Prime Minister’s National Relief Fund.