Mumbai: In a setback to tobacco major ITC, the Securities Appellate Tribunal on Thursday rejected its plea against sale of Hotel Leela venture's key assets to Canadian PE major Brookfield for Rs 3,950 crore.
The SAT verdict boosts the troubled hotel chain's which is at the bankruptcy tribunal since February, along with its present management controlled by JM Financial ARC's efforts to sell four of its five hotels and come out of the insolvency process.
If completed, the Leela-Brookfield deal will be the largest foreign investment in the hospitality sector and culminates more than a year of talks between the two parties.
ITC had moved SAT after Sebi rejected its contention that sale of Leela's assets to Brookfield Asset Management should not be allowed because of related-party transactions and also because the deal would leave the hotel company with no operating or revenue earning assets barring one property.
A three-bench SAT led by presiding officer Tarun Agarwala and CKG Nair and MT Joshi in a 44-page order posted on its website dismissed the main contention that "the transaction is related-party in nature".
After the deal was announced in March, ITC had moved Sebi challenging the deal, following which the regulator asked Leela and JM Financial ARC to put on hold the deal.
The market's regulator had allowed JM Financial ARC, which owns 26 percent in the hotel chain, to vote on the Rs 3,950-crore deal but should not declare the results till the pendency of the case.
The SAT also vacated an earlier stay where it had directed Leela not to declare the postal ballot results till the matter was pending before the tribunal.
Besides, SAT also rejected ITC's plea to suspend its order for two weeks to allow the conglomerate to appe l.
It can challenge the SAT verdict in the High Court and also in the Supreme Court.