Mumbai: The maker of Cello pens has moved the Bombay high court against the company’s previous owners allegedly violating a no-compete agreement and venturing into the stationery business.
French stationery maker Bic Clichy bought a 40% stake in Cello Writing Instruments for Rs750 crore from Mumbai-based Rathod family in 2009. The stake was raised to 75% in 2014, and further to 100% in 2015.
The sale agreement included a clause that prevented its former promoters from entering the stationery business for 36 months.
However, in its petition, Bic said close relatives of the Rathods and a former executive started the Unimax stationery brand in 2016, breaching the non-compete clause. Bic group also claims Unimax products are deceptively similar to Cello pens. The firm has sought the court’s intervention to stop Unimax from being in a competing business, apart from damages of Rs84 crore from the Rathods.
The Bic petition said Unimax promoters Chandu Shah and Satyajit Chatterjee are closely linked to the Rathods. Shah is the brother-in-law of Pradeep Rathod (a former Cello promoter), while Chatterjee held a senior position at Cello’s export operations, and had access to overseas agents, distributors and customers. Being close to the Rathods, he also had access to sensitive information, the petition said.
Email queries to Bic Clichy, Cello World and Unimax remained unanswered till the time of filing the story. Kunal Doshi, a partner at Veritas Legal, the law firm advising Bic Clichy; Varghese Thomas, partner at J Sagar Associates, the law firm representing the Rathods; and Bhavik Mehta, partner of Dhruve Liladhar and Co., the law firm representing Unimax promoters, declined to comment as the matter is sub judice.
To be sure, this is not the first time Bic Clichy is sparring with the Rathods. The original 2009 sale agreement for a 40% stake allowed Bic to increase its stake later, but when Bic made such a demand, the promoters refused, which ended in arbitration that finally went in favour of Bic. According to Bic, at the time of the acquisition, the fair market value of the first 40% stake was around Rs263 crore. However, Bic paid over Rs750 crore, accounting for the business goodwill, and to include the no-compete clause.
Ghisulal D. Rathod-controlled Cello Group has business interests in plastics, construction and financing. The Rathods are also a promoter of BSE listed Wim Plast Ltd, a maker of plastic furniture under the Cello brand.