Coming down heavily on Hotel Leelaventure Ltd, Market regulator SEBI has barred the company from selling its four high-profile hotels, including Hotel Leela Palace Udaipur, and other assets to Canadian investment fund Brookfield Asset Management.

The dramatic development came just a day after ITC, which holds about 8% stake in the company, moved the National Company Law Tribunal (NCLT) against Hotel Leelaventure alleging “oppression and mismanagement”.

ITC also claimed that the deal between Leela and the Canadian investment fund was against the company’s and shareholders’ interests. SEBI has received representations from ITC on the matter and had mentioned this in its letter to Leela.

ITC’s plea was mentioned before the Mumbai bench of the NCLT, which posted the matter for hearing on Wednesday, Hotel Leelaventure had said in a regulatory filing on Tuesday.

“Representations and allegations against HLVL, as received by SEBI in relation to the issue, concerns the interest of the investors in the security market. While representations are being examined by SEBI, in paucity of time involved and in the interest of investors in securities, you are advised to ensure that none of the transactions proposed in the postal ballot notice dated 18 March 2019 are acted upon till further directions from SEBI,” Hotel Leela Venture said in the filing.

In conjunction with the petition to Company Law Tribunal, ITC also filed two applications seeking a waiver of the requirement of the minimum threshold of 10% shareholding, it added. ITC holds 7.92% stake in Hotel Leelaventure.

Earlier in what is being seen as a bizarre decision, the board of Hotel Leelaventure at its meeting on 18 March 2019, while selling the hotel business, together with all assets and liabilities of the hotels located at Bangalore, Chennai, Delhi and Udaipur on a slump sale basis, also forked out Rs150 crore each to the erstwhile promoters – Vivek and Dinesh Nair. Further the sale to Brookfield also included 100% shareholding of the company in Leela Palaces and Resorts Ltd which owns property and holds licences for the development of a hotel in Agra. All other management contracts currently in operation along with employees have been transferred to Brookfield. Hotel Leela Venture has a portfolio of nine properties in India. In effect, it means the Nairs have exited the company lock, stock and barrel for a consideration of Rs 300 crore. As part of the transaction, execution of the licence agreement and centralised services agreement with the company in connection with the Leela situated at Mumbai and the leasehold rights with respect to land forming part of the larger land measuring 24,404 sq metres situated at Old Airport Road, Bangalore by way of a fresh lease from Leela Lace Holdings Pvt Ltd and cancellation of the existing lease with the company.

The total consideration payable to the company is an amount of Rs 3,950 crore subject to adjustments on account of net working capital plus the applicable transaction cost. It goes on to say the company will continue to operate the hotel in Mumbai and own certain land in Hyderabad and the joint development project of residential apartments with Prestige Developers in Bangalore. Brookfield will have the right of refusal over the company’s hotel in Mumbai, as part of the transaction. Interestingly, earlier in February this year, JM Financial Asset Reconstruction Company Ltd (JMFARC) had filed an insolvency petition against the company with the NCLT’s Mumbai bench.