Akshaypat and Anant Singhania fire fresh salvo in battle over JK House flats2 min read . Updated: 16 Sep 2017, 10:38 AM IST
Raymond CMD Gautam Singhania's cousins question firm's move to refer an already concluded agreement to shareholders for retrospective approval
The cousins of Raymond Ltd chairman and managing director Gautam Singhania have questioned the need for the company to refer an already concluded agreement to shareholders for retrospective approval, firing the latest salvo in a battle over the thwarted sale of four redeveloped flats in JK House to members of the Singhania family.
Akshaypat Singhania and Anant Singhania were referring to a 2007 agreement involving four duplex flats the textiles company redeveloped in the South Mumbai property.
Under the agreement with Pashmina Holdings, a subsidiary of Raymond, the four flats were to be sold to existing tenants—Gautam Singhania, his father Vijaypat Singhania, Akshaypat and Anant and their mother Veenadevi—at Rs9,200 per sq. ft. Pashmina Holdings had sub-let the four duplex flats to these four family members from 1994 onwards at a rent of Rs7,500 a month per flat.
Earlier this year, Raymond’s board put this agreement up for the approval of shareholders, who rejected the deal after proxy advisory firms said the selling price was at a 90% discount to market rates. Gautam Singhania also urged shareholders to vote against the sale. That prompted all tenants (except Gautam Singhania) to file arbitration suits against Raymond and Pashmina Holdings in the Bombay high court.
“The Companies Act provision for third-party related transactions is not applicable retrospectively, on past contracts," Akshaypat Singhania, chairman and managing director of JK International Pvt. Ltd, said in an interview.
“It’s a concluded contract. Once you and I have settled down, wrote down the prices, everything has concluded, then how can you change it?" he asked.
Both Akshaypat and Anant Singhania, CEO of JK Enterprises, said the 2007 agreement asked tenants to compensate for a part of the cost of redeveloping JK House by paying one third of the cost. At the then prevailing rate of nearly Rs27,000 per sq. ft, this worked out to nearly Rs9,000 per sq. ft. This price has been the bone of contention.
Anant Singhania said Gautam Singhania, as managing director of Raymond, should have raised the issue earlier when the agreement to lease JK House came up for renewal in earlier years.
“In 2007, when the agreement (to sell redeveloped flats to tenants) was executed, he signed the agreement as a beneficiary of the agreement, or as a participant of the agreement," said Anant Singhania.
Gautam Singhania said he was just following rules laid down by the Companies Act, 2013.
“It’s their view," he said in a phone interview. “The board of Raymond has decided to take the agreement to the shareholders. That is the board’s prerogative. In 2007 and 2017, I also abstained from the board meeting (that decided on this agreement)."
“It was never a family property and right from the beginning belonged to the company," said J.N. Gupta, managing director and co-founder of proxy advisory firm Stakeholders Empowerment Services, who is of the opinion that the property belongs to the shareholders and none of the litigating parties have a right to it, including Gautam Singhania. “The property should be sold at market price so that the shareholders benefit."
Akshaypat and Anant Singhania have also questioned why Gautam Singhania continues to occupy JK House when the licence agreement over the property is still under dispute. Gautam has said previously that he stays there in his capacity as chairman and managing director of Raymond.