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Informist, Wednesday, Aug 21, 2024

 

NEW DELHI – The Delhi High Court has asked RSM General Trading LLC to withdraw in two weeks its petition from a Dubai court, seeking to execute an order to recover 571.77 mln rupees from Honasa Consumer Ltd. The court rather asked the Dubai-based RSM General to deposit the amount with its registry within three weeks.

 

 

The high court said that the contract entered upon by both the companies envisaged resolution of disputes by arbitration, to be governed by the Arbitration and Conciliation Act, 1996, with New Delhi as the arbitral venue. "RSM General, in clear breach of the provision of the contract, filed a suit in the Court of First Instance, Dubai, alleging breach of the agreement by Honasa Consumer, and is now the holder of a decree by the Dubai Court which, applying Dubai law to the dispute, has found the petitioner guilty of breach of the agreement," said the court.

 

The amount, when deposited by RSM General, shall be retained by the registry in an interest-bearing fixed deposit, subject to further orders to be passed by this court or by an arbitral tribunal, as and when constituted, said Justice C. Hari Shankar. In the event the execution of the order is passed by Dubai court against Honasa Consumer, the registry shall release the amount to the company, the court added.

 

The court said that if RSM General produces satisfactory proof of the execution proceedings instituted in the Dubai Court was withdrawn by it, the registry shall release them the deposited amount, along with any interest which may have been earned thereon, said the court.

 

The court also asked RSM General to respond to Honasa Consumer's notice to invoke arbitration within 10 days. If the parties are unable to arrive at a consensus regarding arbitration, or regarding the constitution of the arbitral tribunal, it shall be open to either party to approach this court to constitute the tribunal, said Justice Shankar. 

 

Honasa Consumer, in an exchange filing, said that the high court order was in its favour and will have a positive impact on its financials as it provides protection against execution of the order passed by the Court of First Instance in UAE, Dubai. 

 

The dispute arose from an agreement between the companies in 2020 where RSM General Trading was appointed the authorised distributor for Honasa Consumer products in Dubai. The Dubai Court of First Instance on May 16 asked Honasa Consumer to pay General Trading 25.07 mln UAE dirham compensation for the damages incurred by the latter. Thereafter, Honasa Consumer sought an injunction from the high court against RSM General from enforcing the decree passed by the Dubai Court of First Instance so that it can proceed to invoke the contractually envisaged remedy of arbitration to resolve its disputes.

 

At 1344 IST, the shares of Honasa Consumer traded 0.5% up at 468.00 rupees on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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