Velan Hotels Limited has announced the successful resolution of a long-standing legal dispute through an out-of-court settlement, marking the end of litigation that has been ongoing since 2019. The company informed BSE Limited on March 30, 2026, about the amicable settlement reached with Mohan Clothing Company Pvt Ltd.

Settlement Details and Financial Impact

The settlement involves a significantly reduced payment compared to the original claims. Under the agreement, Velan Hotels paid Rs.20 lakhs to resolve the dispute, substantially lower than the total claim amount.

Background of the Litigation

The dispute originated from an arbitration award issued by a sole arbitrator in favor of Mohan Clothing Company Pvt Ltd. The original claims included multiple components that formed the basis of the legal proceedings.

Original Claim Breakdown

The arbitrator's award encompassed several financial demands:

• Security deposit refund: Rs.9.82 lakh (interest-free)
• Fit-out and interior works: Rs.22.79 lakh with 9% interest
• Damages: Rs.0.50 lakh
• Proceedings cost: Rs.0.50 lakh

Regulatory Compliance and Disclosure History

Velan Hotels has maintained transparency regarding this litigation through regular disclosures to BSE Limited under Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The company had previously updated the exchange on this matter on multiple occasions:

• October 15, 2019
• January 9, 2020
• September 25, 2023
• October 30, 2024

Resolution Benefits

The out-of-court settlement represents a mutually beneficial arrangement for both parties. By reaching this voluntary agreement, both Velan Hotels and Mohan Clothing Company have avoided the uncertainties and costs associated with prolonged litigation. The settlement allows the company to close this legal matter definitively while achieving a substantial reduction from the original claim amount.

The appeal case that Velan Hotels had filed in higher courts challenging the original arbitrator's award is now considered closed based on this agreed-upon voluntary arrangement. This resolution enables the company to focus on its core hospitality business operations without the ongoing legal uncertainties.

Velan Hotels Limited has received a significant development in its ongoing entry tax litigation, with the Madras High Court disposing of the company's writ petition and providing specific directives for the next course of action. The case involves a ₹28.68 lakh tax demand related to an Audi Q7 vehicle imported in 2006.

Court Order Details

The Hon'ble High Court of Madras has disposed of the writ petition filed by Velan Hotels and issued a comprehensive order with three key provisions:

The court's decision provides the company with immediate relief from recovery proceedings while establishing a clear timeline for the appeal process.

Background of the Dispute

The litigation centers around an entry tax demand totaling ₹28.68 lakh for an Audi Q7 motor vehicle imported by the company in 2006. The Assistant Commissioner (ST), Central-1, Assessment Circle, Tirupur issued the demand order after a delay of nearly nineteen years from the vehicle's entry into the local area on August 10, 2006.

Financial Breakdown

The total tax demand comprises the following components:

The interest component represents the largest portion of the demand, having accumulated over the extended period since the original due date of September 20, 2006.

Next Steps and Timeline

Following the court's order, Velan Hotels now has a 30-day window to file an appeal before the Appellate Authority. The company benefits from a 60-day stay on recovery proceedings, providing breathing room to pursue the appellate process. However, the company must secure an appropriate stay order from the Appellate Authority to prevent recovery actions beyond the initial 60-day period.

Regulatory Compliance

This disclosure represents the latest update in a series of communications, following earlier intimations dated January 31, 2026, and March 2, 2026. The company has committed to providing regular updates on material developments until the matter is resolved, in compliance with SEBI regulations regarding litigation disclosures.