Sandeep Gupta & Anr vs Asian Hotels West Limited & Anr

National Company Law Appellate Tribunal Principal Bench, New Delhi COMPANY APPEAL (AT) No. 106 of 2021 (Arising out of Order dated 12th August, 2021 passed by National Company Law Tribunal, New Delhi, Principal Bench, in CP No. 108/241- 242/PB/2021).

IN THE MATTER OF:

1. Sandeep Gupta S/o Shri Sushil Gupta R/o 4/11, Shanti Niketan New Delhi-110021 Email: sandeepg.personal@gmail.com

2. Vinita Gupta W/o Shri Sushil Gupta R/o 4/11, Shanti Niketan New Delhi-110021 Email: vinitagupta@asianhotelswest.com ...Appellants

Versus

1. Asian Hotels (West) Ltd. Having Office at: 6th Floor, Aria Towers, JW Marriott, New Delhi, Aerocity, Asset Area, 4th Hospitality District, Near IGI Airport, New Delhi-110037 ...Respondent No. 1 Email: cs@ariahotels.in

2. Sudhir Gupta S/o Late Chaman Lal Gupta R/o 1801, Tivoli, Hiranandani Garden, Behind Pizza Hut, Powai, Mumbai - 400076 ...Respondent No. 2 Email: sudhir.gupta@asianhotelswest.com

For Appellant No. 1: Mr. Pawan Sharma, Mr. Abhijeet Sinha, Mr. Sidharth Aggarwal, Ms. Divya Bhalla and Mr. Sandeep Gupta, Advocates for A- 1. -2-

For Appellant No. 1 & 2: Mr. Anuj Shah, Advocates for A-1 & A-2.

For Respondent No. 1: Mr. Kumar Anurag Singh, Mr. Zain A. Khan, Advocate for R-1.

For Respondent No. 2: Mr. Ashish Aggarwal, Mr. Kunwar Shashank, Ms. Gurkamal Hora Arora, Mr. Nivesh Kumar and Mr. Nalin Dhingra, Advocate for R-2.

For Respondent No. 1 to 3: Mr. Sameer Sagar, Advocate for R-1 to 3.

For Caveator: Mr. Suman Jyoti Khaitan, Advocate for Caveator.

With COMPANY APPEAL (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 (Arising out of Order dated 02nd September, 2021 passed by National Company Law Tribunal, New Delhi, Principal Bench, in CP No. 135/241- 242/PB/2021).

IN THE MATTER OF:

1. Sandeep Gupta S/o Shri Sushil Gupta R/o 4/11, Shanti Niketan New Delhi Email: sandeepg.personal@gmail.com

2. Vinita Gupta W/o Shri Sushil Gupta R/o 4/11, Shanti Niketan New Delhi Email: vinitagupta@asianhotelswest.com ...Appellants

Versus

1. Asian Hotels (East) Ltd. Having Office at: Hyatt Regency Kolkata, JA-1, Sector-3, Salt Lake City, Kolkata, West Bengal-700106 Email: saumen.chaterjee@ahleast.com ...Respondent No. 1

2. Mr. Radhe Shyam Saraf

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -3-

S/o Late Durga Dutt Saraf Residing at: Hotel Yak and Yeti, Durbar Marg, Kathmandu, Nepal Email: rssaraf@yakandyeti.com.np ...Respondent No. 2

3. Mrs. Ratna Saraf W/o Radhe Shyam Saraf Residing at: Residing at: Hotel Yak and Yeti, Durbar Marg, Kathmandu, Nepal Email: saumen.chatterjee@ahleast.com ...Respondent No. 3

4. Asian Hotels (West) Ltd. Having its registered office at: 6th Floor, Aria Towers, JW Marriott, New Delhi Aerocity, Asset Area 4, Hospitality District, Near IGI Airport, New Delhi-110037. Email: vivek.jain@asianhotelswest.com ...Respondent No. 4

5. Mr. Sudhir Kumar Gupta S/o Late Chaman Lal Gupta R/o 1801, Tivoli, Hiranandani Garden, Behind Pizza Hut, Powai, Mumbai - 400076 Email: sudhir.gupta@asianhotelswest.com ...Respondent No. 5

6. Aria Hotels and Consultancy Services Private Limited Having registered office at: 6th Floor, Aria Towers, JW Marriott, New Delhi, Aerocity Asset Area, 4th Hospitality District, Near IGI Airport, New Delhi-110037 Email: cs@ariahotels.in ...Respondent No. 6

7. D.S.O Limited Having registered office at: Island House, Grand Rue, St. Martins, Guersney, GY4 6RU, British Channel Islands

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -4-

Email: Pankaj.guptams@gmail.com sudhir.gupta@asianhotelswest.com ...Respondent No. 7

For Appellant No. 1: Mr. Anuj Shah, Mr. Abhijeet Sinha, Mr. Pawan Sharma, Mr. Siddarth Aggarwal, Ms. Divya Bhalla and Mr. Sandeep Gupta, Advocates for A-1.

For Respondent No. 1: Mr. Yogesh Jagia, Advocate for R-1.

Respondent No. 1 to 3: Mr. Sumant Jyoti Khaitan, Mr. Sameer Sagar and Ms. Shruti Gupta, Advocates for R-1 to 3.

Respondent No. 4: Mr. Kumar Anurag Singh and Mr. Zain A. Khan, Advocates for R-4.

For Respondent No. 5: Mr. Ashish Aggarwal, Mr. Kunwar Shashank, Ms. Gurkamal Hora Arora, Mr. Nivesh Kumar and Mr. Nalin Dhingra, Advocates for R-5.

JUDGEMENT

[Per; Shreesha Merla, Member (T)]

1. Challenge in these Company Appeals (AT) No. 106 of 2021 & Company

Appeal (AT) No. 113 of 2021 filed under Section 421 of the Companies Act,

2013 (hereinafter referred to as 'the Act') is to the Impugned Orders dated

12/08/2021 & 02/09/2021 respectively passed by the NCLT (National

Company Law Tribunal, New Delhi, Principal Bench), in CP No. 108/241-

242/PB/2021 and CP No. 135/241-242/PB/2021 filed under the provisions

of Sections 241 and 242 of the Act. Company Appeal (AT) No. 106 of 2021 is

being treated as the lead case. Since both these Appeals deal with common

facts & circumstances, they are being disposed of by this Common Order.

2. By the Impugned Order dated 12/08/2021, NCLT has appointed a

Commissioner to submit a comprehensive report regarding the functioning

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -5-

of the Company namely 'Asian Hotels (West) Limited & Anr.' (hereinafter

referred to as the 'AHWL') and observed as follows:

"Now, the point that falls for consideration is whether this Bench is vested with the power to appoint an independent Commissioner with the fact finding mission and to submit a report so that the information which is essentially required for the just adjudication of the list between the parties, is made available. For the convenience of parties Section 241-Sub(l) clause

(a):-

"(a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or"

From the above, the legislation 1s very clear that when the affairs of the company are conducted in a manner prejudicial to public interest or in any manner prejudicial or oppressive to any member or members or in a manner prejudicial to the interest of company, the Tribunal under Section 242(2) clause (a)&(m) and Section 242(4) vested with the power to pass any order in the best interest of public and in the best interest of company. We the Tribunal vested with the powers given to us under Companies Act and Insolvency & Bankruptcy Code are absolutely conscious the repercussions, if at all, a petition under Section 7 is initiated by any financial creditors against this company, when all the independent directors of the company have resigned expressing their inability to continue on the board of the company for the reason that the financial position is very badly suffered and executive director i.e. the petitioner is not taking any steps to regulate the affairs of the company and the wife of Mr. Shushil Gupta is not taking cognizance of any facts. It appears the institutions are proceedings against them and the Hotels are closed and the situations is becoming bad toworse. Even after taking cognizance of these issues which are brought to our knowledge, in the course of hearing by both the parties, if this Bench does not make any efforts to get the real factual position in the best interest of the company or in the public interest

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -6-

for the reason that the public money involved and there are public shareholders, the purpose of adjudication by this Tribunal will not be served.

In view of the same this Bench consisting of both the members deliberated on this issue after taking a break during the course of hearing and we are of the considered view that a commissioner be appointed on a fact finding mission with the power and responsibility as contained below.

In the said process we hereby appoint Mr. M. V. Ravindran, who formerly was the Acting President of Customs, Excise & Service Tax Appellate Tribunal and presently practicing in the Bar, be and is hereby appointed as a commissioner with the power and responsibility to submit a comprehensive report as follows:-

1. Financial position including total loan and defaults committed by the company.

2. Measures taken by the company to service the debt.

3. Who conducted the Board Meetings? Whether the Chairman/ Managing Director of the company Mr. Shushil Gupta was really in a position to manage the affairs of the company or was it left in the hands of the some other persons, when he was incapacitated due to some neurological problem.

4. Numbers of workers and payments dues and any other information relating to and connected with managerial affairs of the company.

We are making it very clear that the commissioner has no power or authority to interfere with the internal affairs of the company or make any suggestion, but only vested with the power and responsibility to interact with both the parties and if necessary also with third parties and others to get the necessary information. We hereby direct both the parties to give the Commissioner, access to the records of the company and provide proper information as required by him. A fee of Rs. 5 lacs is fixed to be payable to the Commissioner which is required to be shared by both the parties equally. The

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -7-

commissioner is duty bound to furnish his report within two weeks from the date of receipt of this order in a sealed cover, without providing the copies of the same to either of the parties or any third person.

As regards the allegation of sharing the confidential information by Respondent no. 2 with third party, in view of the regret expressed by the Respondent no. 2 in his letter, we do not want to pass any order but at the same time, we hereby direct both the parties not to share any confidential information with any third party except with the Commissioner.

Part Heard,

List the matter for submission of report by Commissioner on 02.09.2021."

3. In the Impugned Order dated 02/09/2021, challenged in Company

Appeal (AT) No. 113 of 2021, the NCLT has observed as follows:

"In view of the same, taking utmost care as regards the interest of the company and the shareholders, we hereby order status-quo to be maintained by both petitioners and also the respondents, with regards to the respondent company and the shareholding of the company.

This order of status-quo is to be maintained by all the parties concerned until the next date of hearing, when the Commissioner's report would be made available to us, on the next date of hearing i.e. 16.09.2021."

Brief facts:

4. The first Respondent namely Asian Hotels (West) Limited' is a listed

Company and owns and runs a Five Star Hotel namely Hyatt Regency

Mumbai. Its present directions are:

i. Mr. Sandeep Gupta (Appellant No. 1)

ii. Mrs. Vinita Gupta (Appellant No. 2)

iii. Mr. Sudhir Gupta (Respondent No. 2).

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -8-

The Appellants are part of the Promoter's Group of 'AHWL' which again

consists of two groups namely (a) Sushil Gupta Group and (b) Sudhir Gupta

Group. The Appellants are part of Mr. Sushil Gupta Group being the son

and wife of Mr. Sushil Gupta respectively. Mr. Sudhir Gupta/the second

Respondent is the brother of Mr. Sushil Gupta.

5. Appellant No. 1 Mr. Sandeep Gupta is the whole time Director and

Shareholder of 'AHWL' and is the son of Appellant No. 2. The shareholding of

the Appellants in 'AHWL' is as follows:

S. No. Name of Shareholder Percentage of Shareholding in Respondent No. 1 1. Appellant No. 1 8.16% 2. Appellant No. 2 9.19% 3. Total 17.35%

6. The second Respondent has a shareholding of 1.84% Equity Shares in

'AHWL'.

7. It is averred that the second Respondent is conspiring with a

competitor of 'AHWL' and few so called Independent Directors to oust Mr.

Sushil Gupta Group from 'AHWL' and take over the Company. 'AHWL' owns

Hotel Hyatt Regency, Mumbai and its subsidiary also owns Hotel JW

Marriott in Aerocity, New Delhi. It is averred that Mr. Sushil Kumar Gupta

was suffering from a rare disease and had left the day-to-day management to

the second Respondent who has mismanaged the operations.

8. 'AHWL' was incorporated on 13/11/1980 by three Promoter Groups

namely (a) the Gupta Group, (b) the Jatia Group & (c) the Saraf Group at

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -9-

the beginning of 2003, 'AHWL' owned three undertakings namely (a) Hotel

Hyatt Regency at New Delhi, (b) Hotel Hyatt Regency at Kolkata & (c) Hotel

Hyatt Regency at Mumbai and all the three aforenoted Promoter Groups

owed shares in 'AHWL'. After the demerger, pursuant to an Inter se

Agreement dated 26/10/2009, the shareholding of Saraf and Jatia Group in

'AHWL' was transferred to the Sushil Gupta Group. Being a Member of the

Sushil Gupta Group, the second Respondent also owned the shareholding in

'AHWL' subsequent to the demerger. It is averred that it is only on the

account of the sole efforts of Mr. Sushil Kumar Gupta and the first Appellant

that 'AHWL' today owns valuable assets in the form of two Hotels. The role of

the second Respondent always remained secondary to Mr. Sushil Kumar

Gupta. In order to expand the business of 'AHWL' Mr. Sushil Kumar Gupta

took a loan and extended his personal guarantee to Yes Bank. It is averred

that the Saraf Group is holding 13.95% shareholding in 'AHWL' in violation

of not only the SEBI take over Code but also the Inter se Agreement. The

Sushil Gupta Group challenged the said illegal shareholding of the Saraf

Group before the Hon'ble Delhi High Court and the Appeal in this regard is

pending adjudication. It is averred that during this period, the second

Respondent in collusion with the Saraf Group tried to take over the

management of 'AHWL'. It is averred that various acts of Oppression and

Mismanagement were committed by the second Respondent and in this

situation, the Appellant has filed the said Company Petition on 12/07/2021

seeking urgent Interim Relief against the second Respondent with an

objective to procure the Emergency Credit Line Guarantee Scheme from Yes

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -10-

Bank Limited. The Company Petition was first listed for hearing before NCLT

on 15/07/2021.

9. It is the case of the Appellant that NCLT simply issued Notice on

15/07/2021 and did not pass any appropriate Order against the second

Respondent and adjourned the matter to 05/08/2021. Learned Counsel for

the Appellant submitted that NCLT ought to have heard the Company

Petition with respect to the Interim Relief and then pass appropriate Orders

restraining the second Respondent.

10. It is also submitted that subsequent to the filing of the Company

Petition, the second Respondent filed another Petition under Sections 241 &

242 along with Application seeking waiver which is pending. Another

Petition (CP 135/2021) was also filed by the Saraf Group which is almost

identical to the Petition filed by the second Respondent. The Learned

Counsel strenuously contended that on 12/08/2021, the Company Petition

along with the Petition of the second Respondent were listed for hearing, on

which date, only the Company Petition filed by the Appellants herein was

maintainable as the waiver Application filed along with CP 118 of 2021, filed

by the second Respondent was yet to be decided by the NCLT. It is argued

that NCLT went beyond the Company Petition and appointed a Fact Finding

Committee headed by a Commissioner without the Pleadings having been

completed and without hearing at length the parties concerned.

11. It is the case of the Appellant that the appointment of this Fact

Finding Commissioner was premature and ought not to have been done at

the threshold. As against this argument, Learned Counsel for the

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -11-

Respondent submitted that 'a short Reply' has been filed and therefore it

cannot be said that the pleadings were not complete.

12. This Tribunal vide Order dated 13/09/2021 directed Status Quo to be

maintained by the parties as directed by NCLT vide Order dated

12/08/2021. Vide Order dated 29/09/2021, this Tribunal directed as

follows:

"11. Be that as it may and after hearing the parties, we are of the view that during the pendency of this Appeal, the following order is required to be passed:

i) The Ld. NCLT, New Delhi is directed that none of the parties to whom the report of the Independent Commissioner has been served shall reply upon, utilize and quote any word from the Report of the Independent Commissioner before the Ld. NCLT till this matter is decided by this Appellate Tribunal.

ii) Further, the Ld. NCLT, New Delhi shall suo motu also itself not quote, reply upon any paragraph, passage or word of the report till the Appeal is decided by this Tribunal.

iii) Further, Status Quo as prevailing today shall be maintained by the parties in question."

13. The Hon'ble Supreme Court disposed of the Appeals with a direction

to this Tribunal to take up the matters by 06/12/2021 and dispose of at the

earliest.

14. Pursuant to the directions of the Hon'ble Supreme Court, the matter

was taken up on 06/12/2021 and was posted for completion of the

pleadings. On 14/12/2021, on which date, Learned Counsel for the

Appellant sought to remove some defects and delete the name of the sixth

Respondent and filed the amended Memo of Parties. The matter was

thereafter posted to 12/01/2022 and with a consent of the parties, as one of

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -12-

the Counsels had tested positive for Corona, the matter was adjourned and

heard and reserved on 03/03/2022.

15. Vide Order dated 03/03/2022, during the course of final hearing, this

Tribunal noted as follows:

"Learned Counsel for the Respondent No. 1, 2, & 3 appears and they pray that the status quo may maintained, and further submits that they have no objection if the matter is remitted to the NCLT for hearing and deciding the case on merits."

16. Having heard all parties at length, without delving deep into the merits

of the matter, this Tribunal is of the considered opinion that the matter be

remitted to NCLT for hearing and deciding the case on merits. Having regard

to the facts and circumstances of the attendant case on hand, this Tribunal

is of the earnest view that the contents of the report not be quoted or used,

till all the pleadings are completed and due opportunity is given to the

Appellant for filing their objections. Needless to add, NCLT may, if it feels fit,

decide to place reliance on the report, but not before the pleadings are

completed and due opportunity is given to the Appellants herein.

17. These Appeals are disposed of with the aforenoted directions. The

NCLT shall hear the matter afresh giving due opportunity to the second

Respondent who sought a few days time to file a 'Detailed Reply' before the

NCLT. NCLT shall hear the matter and decide the case as expeditiously as

practicable but not later than three months from the date of receipt of this

Order. We have not expressed any views on the merits of the matter. All

parties are directed to appear before the NCLT on 20/04/2022.

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021 -13-

18. The Registry is directed to upload the Judgement on the website of

this Tribunal and send a copy of this Judgement to NCLT (National

Company Law Tribunal, New Delhi, Principal Bench) forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

NEW DELHI 04th April, 2022

himanshu

Company Appeal (AT) No. 106 of 2021 With Company Appeal (AT) No. 113 of 2021 & I.A. No. 2884 of 2021