Fight for JK House: Gloves are off as Singhanias brace for AGM bout

The Singhania family’s fight over JK House in Mumbai is set for a showdown on Monday. 

Some of the lessees, including Anant Singhania — cousin of Raymond Chairman and Managing Director (CMD) Gautam Hari Singhania — have written to the company, reiterating their right to acquire floors in the property. 

In a letter dated June 1, addressed to Raymond and its directors, Anant and mother Veena Devi Singhania termed the timing and contents of the shareholder resolution moved for the coming annual general meeting (AGM) part of a “mala fide strategy”. The son and wife of the late Ajaypat Singhania, who are together entitled to a duplex flat, cited opinions from eminent jurists to contend the shareholder approval was not required in “law or fact”. The letter, with copies marked to the stock exchanges, demanded that the proceedings of Monday’s AGM be video-recorded and copies be given to them. 

On Monday, Raymond shareholders will vote on the proposal to sell four duplex flats in JK House, located in Mumbai’s posh Breach Candy area, to four Singhania family entities. Others entitled to the flats are Gautam, father Vijaypat Singhania and Anant’s brother Akshaypat Singhania.  

The flats have been proposed to be sold at Rs 9,200 per sq ft, a fraction of the market rate.

Earlier, in a rare case of a promoter wanting to defeat a resolution brought by his company, Gautam had stated that he was not in the favour of the proposal. 

“Needless to say, as a related party, I am required to abstain from voting on this resolution. However, my personal opinion would be to vote against the resolution in the interest of the shareholders and company,” Gautam stated in a press release on Friday. 

Seeking to bust speculation about the deal, Gautam said the tripartite agreement entered in 2007 between the company, lessor and occupants — all related parties — to offer apartments for sale at a substantial discount to the prevailing market prices  would cause a major loss to the company and shareholders. “Keeping this in mind, the company decided not to act on this agreement. As a result, three of the related parties have initiated legal action against the company for implementation,” he added.

Compiled by BS Research Bureau; Source: Capitaline
The Ajaypat branch of the family, which owns over 1 per cent shares in Raymond, is also likely to argue for its rights at the AGM, said sources. As of March 2017, while the promoters control 43 per cent of the equity, Ujjwala Singhania, wife of Akshaypat, owns 1.07 per cent. Life Insurance Corporation, General Insurance Corporation, Mirae Asset, Birla Sun Life and Reliance Capital are among the public shareholders. 

In the letter, Veena and Anant alleged that Gautam was misusing his “special position” as the CMD to “illegally attempt to cause irreparable prejudice to us, to deprive us of our apartment in the reconstructed JK House in discharge of obligations to us under the tripartite agreement”.

They argued the deal was at arm’s length prices as of 2007 and that it was unfair to compare it with 2017 prices as done in the explanatory statement to the resolution. The letter claimed that if a 14-storey structure was reconstructed into a 33-storey one, the sitting tenants were entitled to a higher area and incentives, denied to them. 

Saying they should not be rendered “homeless” in the false garb of “corporate governance,” the letter said, “the highest corporate governance ethical norms require Raymond to honour commitments made in contracts that have been acted upon, rather than attempt to do otherwise”.

Gautam said the audit committee and board of directors took a considered view “based on legal advice and in pursuance of best corporate governance practices and transparency”. And, decided the matter be placed before the shareholders, after disclosing  all relevant facts, for considered decision-making. 

As communicated earlier by me, protecting shareholders interest is of paramount importance to me and we will continue to take every possible step, including legally contesting the claims on the property from related parties, based on legal advice, Gautam’s release added.

Amit Tandon, managing director, Institutional Investor Advisory Services, which had slammed the transactions and questioned the quality of board oversight in Raymond last week, said, “There is a huge disconnect between action and words. If he was concerned about the rights of shareholders, why did he approve payments for such expensive construction?” Yet, Tandon feels the first priority for shareholders should be to stall the sale. After which, they can take up the issue of legal recourse on what should be done with JK House.

When contacted seeking comments on the letter from lessees and the future use of JK House, the Raymond spokesperson reiterated that all disclosures required as per law have been made. "The use of company asset is a matter to be decided by board from time to time," he said adding the company's decisions have been as per legal advice.

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