Court resolves hotel share ownership impasse

HIGH Court judge Justice Alphas Chitakunye has ordered Hotel Elizabeth shareholders to share the $200 000 dividends declared two years ago, putting to rest the long-running legal wrangle between co-directors Natverlal Morarji Patel and Hemant Ramanal Patel who were fighting over control of the tourism facility.

BY CHARLES LAITON

The impasse between Hotel Elizabeth shareholders over payment of dividends of the same guesthouse was recently resolved by High Court judge Justice Alphas Chitakunye who ordered the hotel, which operates as Veemco (Pvt) Ltd.
The ruling made on June 28, followed an application lodged by Natverlal, seeking an order to compel his business partner, Hemant who had been heading the hotel’s operations for the past 35 years, to audit the hotel’s books and declare dividends.

“In casu, it is common cause that though applicants’ (Natverlal) shareholding in total was 50%, effective control was with second respondents (Hemant). It is my view that section 196 (of the Companies Act) must apply in such a situation,” Justice Chitakunye said.

“This is so because it is the effective control that remains in the oppressive or unfairly prejudicial conduct. Besides being the managing director with effective control, second respondent had also appointed a majority of the other directors without the knowledge and consent of the applicants.”

The judge said given Hemant’s move, Natverlal “would be outvoted by Hemant’s appointees, thus confirming his effective control over the hotel.

“It is because of this effective control that the second respondent would not respond to applicant’s enquiries or complaints. Those complaints pertained mostly to second respondent’s conduct and management of first respondent’s affairs which were deemed oppressive and prejudicial to applicants’ and first respondent’s interest,” the judge said.
“I thus conclude that when all the aspects alluded to above are considered cumulatively, the applicants have on a balance of probabilities proved their case,” he said.

“Accordingly therefore it is ordered that: – (1) First respondent (Veemco) shall pay out to shareholders (Natverlal and Hemant) a dividend of $200 000 declared on February 2, 2016 subject to legal requirements necessary for the payment to be effected. The second respondent (Hemant) shall ensure that such process is proceeded with and concluded within 60 days of this order.”

The judge also ordered the shareholders of the hotel to hold a shareholders’ meeting to decide the issue of directors within 30 days of his order.

“The first respondent shall avail to applicants all the first respondent’s audited accounts for the period January 2009 to date of judgement within 60 days from the date of this judgement or such longer time as the applicants may consent to,” he said.

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