Singhanias question referral of JK House lease to shareholders
Akshaypat Singhania and Anant Singhania have questioned the need for Raymond Ltd to refer an already concluded agreement to the firm’s shareholders for retrospective approval.
The agreement, the brothers, who are cousins to Raymond Ltd chairman and managing director Gautam Singhania, refers to a 2007 deal involving four duplex flats that the textiles firm redeveloped in JK House in South Mumbai.
According to the agreement, four duplex flats of Pashmina Holdings—a subsidiary of Raymond—were to be sold to existing tenants Gautam Singhania, his father Vijaypat Singhania, Akshaypat, and Anant and his mother Veenadevi, once renovations of the flats were complete, at ₹9,200 per square feet.
Earlier this year, Raymond’s board put this agreement up for the approval of shareholders. Raymond shareholders rejected the deal after proxy advisors pointed out that the selling price was at a 90% discount to market rates. That prompted all tenants (except Gautam Singhania) to file arbitration suits against Raymond and Pashmina Holdings in the Bombay High Court.
“The Companies Law Act provision for third party related transactions, is not applicable retrospectively, on past contracts,” said Akshaypat Singhania, chairman and managing director of JK International Private Ltd, in an interview with
Mint. “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 agreement signed in 2007 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 ₹27,000 per square foot, this worked out to nearly ₹9,000 square foot. This price has been the bone of contention.
Anant Singhania said that 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 laid down rules 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),” he said.
“It was never a family property and right from the beginning belonged to the company,” says JN Gupta, managing director and co-founder, Stakeholders Empowerment Services (SES), who is of the opinion that the property belongs to the shareholders and none of the litigating parties have a right to it including current chairman and managing director Gautam Singhania.
Akshaypat and Anant Singhania have also questioned why Gautam Singhania continues to occupy JK House when the license agreement over the property is still under dispute.