COURT
ORDERS LG TO SELL FMCG GOODS VIA JV
In
a significant development likely to have far-reaching implications
for partnerships between Indian and foreign companies, the
Madras High Court has restrained LG Household & Healthcare
(LGHHL), Korea, from marketing FMCG products with the LG logo
in India, either directly or through any of its subsidiaries/agents,
except through the Indian partner, India Household & Healthcare
(IHHL).
The High Court has also granted an injunction restraining
LGHHL from interfering with the Indian partner's efforts to
manufacture FMCG products in small packs with the LG logo
in India. The interim injunction was granted by Justice NV
Balasubramanian.
IHHL had moved an application before the court following LGHHL's
termination of its contract on February 5. The case has been
posted for further hearing on April 8.
In another case, Justice R Balasubramanian granted an interim
injunction restraining LGHHL from importing and selling its
range of cosmetics in the country.
Explaining the details of the case to the media, senior counsel
of the Madras High Court Nalini Chidambaram said the “interim
injunctions” have been granted, pending arbitration. She alleged
this is a classic case of an MNC trying to dump the Indian
partner after exploiting the latter's investments and expertise.
After
tying up with the Indian partner to enter and create a market
for its range of FMCG products, LG Group, Korea, decided to
dissociate itself from IHHL, citing reasons like the LG Group's
internal issues pertaining to the usage of LG logo.
Ms
Chidambaram said that the removal of Press Note 18 by the
government of India has been misinterpreted by the LG Group,
Korea.
“They
seem to be under the mistaken impression that they are at
liberty to renege on even existing JV commitments.
That
is why, within days of scrapping of Press Note 18, they chose
to unilaterally and arbitrarily terminate the contract with
the Indian partner,” she said.
The
termination of the contract was challenged in the Madras High
Court for violation of provisions under the Indian Contract
Act, she said.
