The Madras High Court has appointed an administrator replacing the board of directors of TTK-LIG Ltd, a joint venture between the TTK Group and UK-based New Bridge Holdings BV, a step-down subsidiary of Reckitt Benckiser Group Plc.
This comes as the latest development in the legal battle between the partners to control TTK-LIG, makers of condom brands — Durex and Kohinoor.
In an appeal filed by New Bridge Holdings BV in the High Court on an earlier interim order of the Chennai Bench of Company Law Board (CLB), Justice RS Ramanathan ordered Justice NV Balasubramanian, a former Judge of the court, as the administrator of TTK-LIG.
“The administrator is to head the Committee of Management replacing the board of directors and the Committee of Management will have four members, two to be nominated by the appellant and two to be nominated by the respondents 2 to 11,” said the order. Here, the appellant is New Bridge and respondents 2 to 11 include managing director of TTK-LIG, TT Jagannathan, chairman, TTK Healthcare Ltd, and eight others.
“The administrator shall appoint such persons after consulting the nominees of the applicant and the respondents 1 and 11 to operate the bank account and it is open to the administrator to make applications to this court for further direction, if he feels necessary,” the order stated. Respondent number one is the JV, TTK-LIG.
New Bridge’s appeal
In its appeal, New Bridge sought appointment of an independent administrator to control the management and operations of the JV company and a stay on the resolution passed by the board meeting on May 2, 2011, in which the board of TTK-LIG allegedly decided to reject the nominees of New Bridge to fill the director positions and also appointed TTK Healthcare as distributor for domestic market.
A mail sent to TT Jagannathan remained unanswered. R Jawahar Lal, partner of PRA Law Offices, which is advising the JV’s foreign partner, confirmed the order, but refused to comment more.
A Reckitt Benckiser spokes-person said, “We confirm the order passed by the Madras High Court. In addition, the board resolution of 2nd May 2011 has been stayed, which was not stayed by the Company Law Board earlier.”
The HC noticed that the CLB, in its order, observed that consequent to the board meeting on May 2, 2011, mutual trust and confidence between the two constituents of the JV company had been completely destroyed. The CLB rejected New Bridge’s plea stating a stay would lead to deadlock in the management of the affairs of the company.
The CLB also appointed a valuer to value the shares of the company after which one of the parties could opt for an exit. The JV, was exporting the condom brands to the foreign partner, stopped exports after the dispute, according to reports.
The TTK group argued that New Bridge was not a JV partner as the JV agreement was signed with healthcare firm SSL. Thus, though a shareholder, New Bridge does not have the locus standi to file the petition. However, the court rejected the argument and stated that as a major shareholder along with TTK, New Bridge had the locus standi to file the petition.
TTK had formed a JV with UK-based London Intern-ational Group Plc in 1963, as London Rubber Company (India) Ltd and changed it to TTK-LIG Ltd in 1997. LIG and TTK each had 49.87 per cent shares in the JV. In 1999, LIG was acquired by SSL and its entire stake in the JV was transferred to a wholly-owned subsidiary New Bridge Holdings BV. In Nov 2010, Reckitt Benckiser took over SSL and its subsidiary became a step-down subsidiary of Reckitt Benckiser.