Emaar case: Telangana’s legal fight bears fruit

Hyderabad: Telangana Government’s relentless legal fight against the Emaar Hills Township Private Limited (EHTPL) has borne fruit with National Company Law Tribunal (NCLT) directing Emaar Properties (Dubai) and Emaar Holdings (Mauritius) not to deal with EHTPL assets and compensate the State Government for the losses incurred. The NCLT also permitted a petition filed by Telangana State Industrial Infrastructure Corporation (TSIIC) against EHTPL.

The far reaching decision of the NCLT in Hyderabad came on Wednesday.
In 2000, the then Andhra Pradesh Government had awarded a tender to Emaar Properties PJSC Dubai for constructing an integrated tourism project at Manikonda. Andhra Pradesh Industrial Infrastructure Corporation (APIIC) was the nodal agency for executing the project.

An agreement was signed to this effect and a special purpose vehicle – Emaar Hills Township Private Limited was set up with APIIC holding 26 per cent shares and the balance shares by Emaar Properties PJSC Dubai.

However, during execution of the project, it was alleged that Emaar Properties PJSC Dubai and Emaar Holdings (Mauritius) had connived and assigned the project to Emaar MGF Land Limited, violating the norms of the agreement. This resulted in huge losses to APIIC as the lands allocated for the project were sold at undervalued price. Raising objection and mismanagement, APIIC approached Company Law Board, Chennai and urged inquiry into the reported irregularities.

As the appeal was pending, Andhra Pradesh was bifurcated in 2014 and the project situated in Manikonda became part of Telangana. The property was passed from APIIC to TSIIC by operation of law and subsequently the appeal was transferred to NCLT, Hyderabad.
TSIIC had appealed NCLT not to permit the companies to deal with the assets and sought compensation for the financial losses incurred by the State Government.

However, EHTPL claimed that shares have to be transferred from APIIC to TSIIC (in the wake of State bifurcation). EHTPL further contended that since shares were not transferred to TSIIC, it does not become the owner.
Countering these claims, TSIIC said transfer of shares was not required as it became the owner of shares, by operation of law.

Observing that issues raised in the appeal were in public interest, the NCLT, Hyderabad on Wednesday issued orders in favour of TSIIC (Telangana Government). It directed Emaar Properties (Dubai) and Emaar Holdings (Mauritius) not to deal with EHTPL assets and compensate the State Government for the losses incurred.