The founder-promoter of SMILE Micro Finance, N Sethuraman, and DWM Investments (Cyprus) Ltd are in a legal tussle for the control of the Chennai-based non-banking financial company (NBFC). A judge of the Madras High Court recently dismissed a petition by Sethuraman, who sought an order of injunction restraining DWM Investments from taking any major management decisions in the NBFC, pending arbitration proceedings.
SMILE Mirco Finance and DWM Investments had entered into an agreement in December 2009, through which the latter infused around Rs 50 crore in three tranches into the NBFC, following which DWM Investments' stake in SMILE rose to 66.64 per cent. The investor firm also issued proxy rights to the founder, for voting in various meetings. The promoter group mainly consists of the family members of Sethuraman. However, according to the order copy of the Madras High Court, the founder had resigned from the board on October 24, 2011, and DWM Investments revoked the proxy rights granted to him in the same month.
It was revealed that Fathi Software Pvt Ltd, a company managed by Sethuraman's daughter, has lodged a claim of Rs 5 crore from SMILE Micro Finance for software licence and maintenance agreement due to pay.
While the dispute has been going on for some time, another litigation also emerged with Sethuraman's wife filing a complaint against her husband alleging diversion of funds to a charitable trust she had floated earlier.
The court said that Sethuraman has suppressed the information of revocation of proxies and Sethuraman did not indicate what constitutes major management decisions and what are minor decisions.
During the pendency of the suit, DWM Investments issued a notice through newspapers on June 15, 2013, claiming the control of the SMILE Micro Finance. Immediately upon seeing it, the promoter group members in suit CS No 143 of 2012, took out an application in OA No 520 of 2013, said the copy of order.
SMILE Mirco Finance and DWM Investments had entered into an agreement in December 2009, through which the latter infused around Rs 50 crore in three tranches into the NBFC, following which DWM Investments' stake in SMILE rose to 66.64 per cent. The investor firm also issued proxy rights to the founder, for voting in various meetings. The promoter group mainly consists of the family members of Sethuraman. However, according to the order copy of the Madras High Court, the founder had resigned from the board on October 24, 2011, and DWM Investments revoked the proxy rights granted to him in the same month.
It was revealed that Fathi Software Pvt Ltd, a company managed by Sethuraman's daughter, has lodged a claim of Rs 5 crore from SMILE Micro Finance for software licence and maintenance agreement due to pay.
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According to information available, the promoter has went ahead with an appeal against the single-judge Bench's order in the higher forum. The companies were not immediately available for a comment.
While the dispute has been going on for some time, another litigation also emerged with Sethuraman's wife filing a complaint against her husband alleging diversion of funds to a charitable trust she had floated earlier.
The court said that Sethuraman has suppressed the information of revocation of proxies and Sethuraman did not indicate what constitutes major management decisions and what are minor decisions.
During the pendency of the suit, DWM Investments issued a notice through newspapers on June 15, 2013, claiming the control of the SMILE Micro Finance. Immediately upon seeing it, the promoter group members in suit CS No 143 of 2012, took out an application in OA No 520 of 2013, said the copy of order.