The Supreme Court today stayed proceedings by a local court in Kanpur on a petition by the Lohia Group for buying the stake of its machinery joint venture Austrian partner Starlinger at a disputed valuation.
The Lohia Group had sought to acquire Starlinger's 40 per cent stake in the joint venture -- Lohia Starlinger -- at a price considered lower than the market value by the Austrian firm.
Questioning the proceedings in the Kanpur court, Starlinger had moved the Supreme Court seeking an injunction and direction for referring the issue to an arbitrator.
The Supreme Court bench comprising Justice Altamas Kabir and Justice A K Patnaik also issued a notice to R K Lohia of Kanpur-based Lohia Group, directing him to file a reply.
During the proceedings, senior advocate Dushyant Dave, appearing for the Austrian firm, submitted that as per their SHA in Lohia Starlinger, both the promoters were not to sell their shares to outsiders in case either wanted to exit.
Starlinger is a global leader in the field of machinery and process technology for woven plastic sack production. In 1992, it had formed a JV with the Lohia family, named Lohia Starlinger.
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Later, the Austrian firm wanted to sell its 17,60,000 shares in the JV and referred the matter to KPMG for price determination. However, KPMG fixed a negative price, much below the market value, which was the bone of contention between the two partners.
Lohia, stressing on the SHA, appointed one of their group firms, Shruti Finsec Private Limited, to buy Starlinger's 40 per cent stake in the JV at the share price fixed by KPMG. However, this was opposed by the Austrian firm, which wanted to negotiate the price.
Later, the Lohia family filed a suit in the Kanpur sessions court, requesting a direction to the Austrian company to sell its shares to Shruti Finsec.
According to them, as per the agreement, Starlinger could not sell its 40 per cent stake to outsiders and the Austrian firm would have to transfer shares to the Lohia Group nominee at the price fixed by KPMG.
However, this was opposed by the Austrian firm, which filed an application before the sessions court for referring the matter for arbitration, which was rejected.
Subsequently, Starlinger approached the Allahabad High Court, which June 6, 2010, also on rejected its plea, observing that the Austrian firm had already approached the Company Law Board seeking a similar relief and can not use two forums at one time.