HC restrains Wadia's French partners from selling stake
Mumbai, Dec 5 (UNI) The Bombay High Court today restrained Groupe Danone, having a joint venture with the Wadia Group, from ''creating third party interest'' in the five per cent stake that the French company picked up in another Indian company, Avestha Gengraine.
A division bench comprising Justices R M Lodha and S A Bobde held that Danone cannot sell or transfer the shares of Avestha and the said order will be in force till Janaury 10, 2007. After this time, the matter will be presided over by a single judge.
In fact, while referring the main dispute to a single judge, the bench observed that ''prima facie Danone seems to have violated the agreement'' as to making investments outside the JV without consent.
Groupe Danone had entered into a Joint Venture with the Wadia Group in 1994 called Wadia BSN Ltd. As per the JV if either of the parties was interested in independently investing in any ''business opportunity'' in India, it would first place the proposal before the board of Wadia BSN.
The pre-condition was that if the JV company was interested in the said proposal, then either party singly could not invest in it.
On the other hand, if Wadia BSN was not interested in the said opportunity, then either of the parties could take it up.
This agreement has now become the point of dispute between the JV partners. In October, Danone put up a proposal in the board meeting of Wadia BSN that the JV could acquire a five per cent stake in Banglore-based company Avestha. However, according to Wadias', Danone later acquired a five per cent stake in Avestha on its own without consent from Wadia BSN.
This violated their agreement, especially when the JV itself was interested in acquiring stakes in Avestha. Since Avestha is also in food and beverages business, Danone is investing in a competing business, contended Wadia's counsel.
He wanted the Judges to order Danone to ''surrender or relinquish'' the Avestha shares, but the judges refused to pass such an order at this stage.
UNI ARM OBB MSJ RS2106