Hotel Elizabeth shareholders fight over dividends

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One of the country’s oldest hotels, Hotel Elizabeth’s owner and Veemco (Pvt) Ltd co-director, Natverlal Morarji Patel, has approached the High Court, seeking an order to sell the hotel, saying his business partner, Hemant Ramanal Patel, had deprived him of thousands of dollars in unpaid dividends for the past 35 years.

BY CHARLES LAITON

In the court application, which is awaiting judgment before High Court judge, Justice Alphas Chitakunye, Natverlal said he was applying for the court to sell the property or in the alternative, to have the company wound up.

Natverlal and Natverp Trust are cited as applicants in the matter, while Hemant and Veemco (Pvt) Ltd are cited as respondents.

“As I am not employed, I do not have any regular means of income other than a modest pension and consequently it has become imperative for me to receive an income from my major asset, namely my 50% shareholding in the first respondent (Veemco). I have not received any dividend income from Veemco since the second respondent (Hemant) became a shareholder of Veemco and therefore for about 35 years,” Natverlal said.

According to court papers, Natverlal and Hemant have 50% shareholding each in Veemco, which they both inherited from their parents, who were also business partners.

“My co-shareholder’s (Hemant) conduct gives me ample grounds to apply for a winding up on the basis that it is just and equitable, but I intend to act in accordance with the provision in section 208(2) of the Companies Act and apply for alternative relief,” Natverlal said.

The 82-year-old businessman, who left Zimbabwe for the United States in 1979 and returned to Zimbabwe in April 2016, said he once visited the country in 2011 after realising that there was no income coming from the joint business.

In his founding affidavit, Natverlal said he held meetings with Hemant, who told him that some money had been paid to the company’s chairperson, identified in court papers as M P Patel, who claimed to have had the power of attorney, enabling him to collect the cash on Natverlal’s behalf.

But, Natverlal said he made further enquiries from his lawyers about the said power of attorney, and was told nothing of that sort ever happened and even efforts to force Hemant to produce one proved futile.

“Veemco is a property-owning company and earns its income from letting out its property. As far as I am aware, it has done so since 1953. The property consists of a portion of the Elizabeth Hotel, including the first and second floor and shops situated underneath the first floor of the hotel,” Natverlal said.

“There are now three shops as part of that building. All three shops and the hotel have been rented out in the past and are rented out. The hotel section also includes a restaurant, a night club and a bar on the first floor, as well as 15 guest rooms on the second floor all leased by the present tenant,” he said.

The businessman further said Hemant had been neglecting the place, adding that the companies’ bank accounts were in bad shape, as they did not reflect the actual amounts received.

While referring to 2014 financial accounts, Natverlal said: “The strange aspect of that year is that the bank statements show a cash balance at December 31, 2014, of $100 463,53, but the financial accounts (the balance sheet) shows an amount of $217 544 ‘cash on hand and at bank’. Clearly, the second respondent must explain the missing cash of approximately $100 000, which was almost certainly in cash by the second respondent.”

Natverlal further said in some instances, no money was deposited into the company’s account creating an impression that Hemant had taken the cash and used it for his personal needs, adding that at some point, Hemant also lied to him on dates when the hotel was allegedly closed down by authorities for not being able to offer suitable accommodation to the public.

Natverlal also said he even offered to sell his shares in the business, but Hemant was not forthcoming and did not want to treat him as a shareholder, avoided discussing Veemco’s business affairs with him, hence, he had approached the court for recourse.
In his response, Hemant, admitted being a 50% shareholder in the company, but claimed there was no reason for the hotel to be sold.

“I deny any allegation of fraudulent or improper conduct made by the first applicant (Natverlal). My beneficiaries are entitled to one-half of the proceeds of any dividend and, therefore, I too stand to benefit from such payment of dividend,” Hemant said.
“The first applicant’s application is with respect improper and incompetent and has been filed before he has exercised his rights in first respondent in terms of the Companies Act.

”He has not called any meeting of members to determine the issues that he raises in his application and he has made baseless allegations against me personally to seek to embarrass me.”