HC clears way for Sun F&C schemes sale to Principal

Sun F&C Mutual Fund has won the first round in the legal battle to sell its schemes to Principal Mutual Fund when it received an order from the Calcutta High Court yesterday, which dismissed a suit filed by two minors of the Khemka family.

Justice Jayanta Kumar Biswas dismissed the suit and ordered the fund to file an application seeking release from the suit.

Manju Manot of L P Manot & Co, legal counsel of the Khemka minors, said her clients would challenge the order in the division bench. R Ginodia & Co was the advocate on record for the mutual fund.

Mihir and Kushal, two minors of the Khemka family, obtained an injuction from Justice Pinaki Chandra Ghosh last year on sale of shares of the Khemka family in 54 assets and 31 properties.

The list included Sun F&C. They claimed the fund was jointly promoted by their family in association with Foreign & Colonial Emerging Markets of UK.

In an ad-interim order, Justice Ghosh later modified his verdict excluding Sun F & C from the proceedings which the Khemka minors challenged.

With today's order, the companies in which the Khemkas would not be allowed to sale their shares included Sun Securities (India) Pvt Ltd, Sun Breweries CIF Ltd, Sun Interbrew Ltd, Sun Technology Ltd and several overseas firms Indah Rubber, M R Flour Mills Pvt Ltd, Asia Impex Pvt Ltd and Khemka Instruments.

The trustee board of Sun F & C, in its petition, said, "The initial corpus of Rs 5 lakh for setting up the mutual fund was paid by Foreign & Colonial Emerging Markets of UK and all subsequent funds of the schemes came from the public. The fund is not owned by any member of the Khemka family."

The genesis of the legal battle could be traced a year ago when Mihir and Kushal, great grandsons of the group founder Rameswar Lal, went to the Calcutta High Court asking for restriction on sale of any property and companies promoted by their family.

Three sons of Rameswar Lal-Satyanarayan, Badri Prasad and Basudev separated in 1940s. Other four sons- Chandi Prasad Khemka. Shyam Lal, Ballabh Prasad and Nand Lal-are managing the show now.

The minors, who are sons of Sanjay and grandsons of Chandi Prasad, have alleged that they, along with their mother, were not staying with their father and therefore they would be awarded with their rights in the family assets.

The Khemkas, promoters of the Sun group of companies, had been active in the former soviet unit since 1958 as the leading exporters of infrastructure and capital goods.

The group flourished in the 1990s under the aegis of Nand Lal. The group has been active exporter of infrastructure and capital goods.

In 1990, the group set up Sun Brewing which formed a JV with Interbrew of Russia to form Sun Interbrew. The company, during its heydays, used to enjoy 20 per cent of the Russian beer market.

In 1996, the group established Sun Capital Partners, a $ 155 million private equity investment firm.