Dubai Court Dismisses Honasa Consumer’s Objections in Dispute with UAE Distributor
Mamaearth’s parent company, Honasa Consumer, has notified Indian stock exchanges that the Merit Court in Dubai has dismissed the objections that the firm and its distributor in the Middle East and Africa, RSM General Trading, submitted.
Refusal to revoke the trading license of Honasa Consumer General Trading LLC and properties of Honasa Consumers in the United Arab Emirates.
A Dubai court (on October 1) refused to revoke the trading license of Dubai-based Honasa Consumer General Trading LLC, a separate legal and financial entity and not related to Honasa.
Also, the Dubai Court ordered the seizure of Honasa’s properties in Dubai as compensation of AED 25 million (worth Rs 57 crore) was ordered by the Dubai Court.
RSM General Trading is Honasa’s distributor in the Middle East and Africa region between July 30, 2020 and January 17, 2023.
Notably, Honasa Consumer severed its ties with RSM General Trading a few months before listing on the Indian market.
In July 2023, RSM General Trading LLC sued Honasa Consumer Limited in a Dubai court for illegally terminating its distributors and filed a precautionary merger application against Honasa in the Merits Court in Dubai.
Cancellation of trading license of Honasa Consumer General Trading LLC.
Later, on June 6, 2024, the Dubai Court allowed Honasa Consumer Limited’s UAE assets to be incorporated, however, refused to cancel Honasa Consumer General Trading LLC’s trading license.
RSM General Trading LLC and Honasa Consumers Limited lodged complaints against the aforementioned precautionary order.
In Dubai, if the debtor is not domiciled in the UAE, a preliminary attachment order can be obtained for the debtor’s assets such as bank accounts.
A petition for an interim injunction (a court order to stop something from happening) and anti-enforcement protection against the Dubai court judgment was filed by Honasa consumers at the Delhi High Court on May 16, 2024.
Later in August, the Delhi High Court issued an interim stay on a UAE court’s order that ordered RSM General Trading to pay Rs. It ordered the company to pay damages worth Rs 56.6 crore. The court ordered RSM General Trading to withdraw the execution proceedings in the Dubai court.
In a briefing to the stock exchanges, Honasa noted that the recent Dubai court order (dated October 1) had no financial impact on Honasa, due to a Delhi High Court judgment ordering RSM to withdraw any executions filed in Dubai, UAE. 57 Crores (Approx) to Delhi High Court Registry.
If the execution proceedings filed by RSM in Dubai are successful, the deposited Rs. 57 crores (approx) will be released to Honasa.
The RSM has not withdrawn the execution proceedings in Dubai, UAE or the Delhi High Court Registry for Rs. 57 crore (approx), Honasa is in the process of filing a contempt case against RSM in the Delhi High Court for non-deposit. “For violating the Delhi High Court order,” it said.
Further, Honasa will appeal the order in Dubai and accordingly, the order will not have any adverse financial impact on Honasa till the end of these appeal proceedings, it added.