Telangana HC Fines Maha Hotels

Hyderabad: The Telangana High Court awarded exemplary costs of Rs.10 lakh to Maha Hotels Projects Ltd, Maharashtra, and dismissed the writ petition challenging the state government’s decision to allow the transfer of Golden Jubilee Hotels Private Limited (Trident Hotels in Gachibowli) to a new investor under the insolvency resolution plan.

Maha Hotels, a venture firm of My Home Group, won the tender in 2008 to become the lead developer of a consortium to develop, finance, construct, operate and transfer a five-star hotel on land leased by the Telangana tourism department and Shilparamam Arts, Crafts and Culture Society on payment of monthly rent and development premium.

After the startup defaulted on its payments, several banks moved the National Company Law Tribunal (NCLT) to initiate insolvency resolution against Golden Jubilee Hotels. East India Hotels Private Ltd (Oberoi group), which manages Trident Hotel, also approached the court.

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

Challenging the committee’s decision, Maha Hotels approached the Supreme Court to declare it arbitrary. Maha Hotels’ contention was that its alleged accrued rights as lead developer could not be extinguished without due process or compensation. He also claimed that 100 per cent foreign direct investment was allowed in Golden Jubilee Hotels Pvt. Ltd., the petitioner has violated India’s Consolidated Foreign Direct Investment Policy by the decision and has sought directions from the Reserve Bank of India and the Union of India not to allow such investment.

Justice Nagesh Bheemapaka held that the petition was devoid of merit and amounted to abuse of jurisdiction of the court, especially in view of the extensive cases already decided by the National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), Supreme Court and Supreme Court on relevant 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 the state government’s consent to the share change was mandated by the approved scheme and the empowered committee had taken a decision on the matter. Justice Bheemapaka stated that the petitioner, who has failed repeatedly before multiple forums, cannot revive the resolved issues through a writ petition.

Concluding that the suit was frivolous and obstructive, the court dismissed the petition for Rs 10 lakh, the costs of which were to be paid to the Prime Minister’s National Relief Fund.