Court orders Raj Travels closure over huge debts
Sep 14, 2012, 07.01AM IST TNN [ Swati Deshpande ]
MUMBAI: Early last month, he had ended his life, now the Bombay high court has wound up his company. Late on Wednesday, Justice S J Kathawalla wound up Shree Raj Travels and Tours, the company that Lalit Sheth had built and nurtured for close to four decades, making it a brand name among tourists. The reason: The company had debts in excess of Rs 40 crore and the chances of repaying them after Sheth’s suicide appeared slim, said counsel Birendra Saraf, who represented one of the creditors.
There were many creditors who had earlier filed petitions to wound up the travel firm. In most cases, Sheth had settled the claims or had made preparations to do so. His troubles really began in mid-2000 when he launched a business in inter-state bus transport. He spent crores to buy Volvo buses and make lavish lounges. The business never took off as planned and he suffered huge losses. Even while he was reeling from the losses, in mid-2008, the European recession hit the travel business hard and Sheth’s business was affected too.
Debts started piling and in 2008-09, three more winding up petitions were filed by Thailand-based Path Finders Travel Company, Destinations of the World and Rail Europe to recover their dues. Path Finders’ counsel Saraf said his clients serviced Raj Travels’ clients locally with hotel bookings and travel plans. It claimed dues of Rs 5 crore in 2009.
Saraf on Wednesday told the court that “with the main driving force of the company no more, the likelihood of getting any payment is virtually impossible”. Counsel for Destinations of the World, Dinyar Madon, whose claim was for Rs 5 crore, also pointed to the financial difficulties Sheth’s firm was in and Rail Europe’s counsel Girish Kedia said his dues were worth about 65,000 Euros.
Rajiv Kumar and Abhishek Khare of Khare Legal Chambers who represented Raj Travels, opposed the winding up petitions, saying earlier too, the company was hit by a “temporary financial business loss”, which could be overcome. They said they had paid off other creditors, including HDFC Bank, and said the accounts of Path Finders and DOTW were disputed. They pointed out that Rail Europe had failed to invoke a bank guarantee of 44,000 Euros issued to it and now could not seek relief from court.
When HDFC had filed a winding up case against Shree Raj Travels and pursued it doggedly in 2009, the amount due to it was Rs 13 crore plus interest. Eventually, it ended in an out-of-court settlement in April 2011 with Sheth paying around Rs 6 crore. The State Bank of India, a secured creditor of Raj Travels, has about Rs 30 crore due to it, including Rs 17 crore as the principal amount. But it has the firm’s properties charged to it and did not want the firm to be wound up. But the judge after hearing them all felt a winding up case was made out. A detailed order would be passed later.