HC admits appeal by Khemka minors on Sun MF plans sale

Calcutta High Court has admitted an appeal filed by two minors of the Khemka family challenging order of a single judge which allowed Sun F&C Mutual Fund to sell its schemes.

This admission may hinder Sun F&C's attempt to sell its schemes to Principal Mutual Fund. The legal battle has held up the proposed sale for over a year after both buyer and seller agreed on the transaction.

The Appeal Bench of Justice D K Seth and Justice R N Sinha today admitted the appeal for hearing on April 2004.

However, the court has refused to stay the order of the single bench which quashed the name of the mutual fund from a suit filed by two Khemka minors seeking family partition. The single bench order was passed on February 18.

The bench of Justice Seth and Justice Sinha upheld the observation of the single judge that "Sun F&C Mutual Fund can not be a family property of the Khemkas."

In the appeal the minors, Mihir and Kushal, have sought stay of operation of single judge order on the ground that the mutual fund was a family property.

The trustee board of the mutual fund opposed the appeal on the ground that the fund was not owned by any member of the Khemka family only public money was in the fund.

The genesis of the legal battle could be traced one-and-a-half-year ago when the two minors great grandsons of the group founder Rameswar Lal went to the court for partition of the Khemka family properties and assets.

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 joint venture with Interbrew of Russia to form Sun Interbrew.

The company, during its heyday, 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.