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Since 1st March, 1999
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Shaw Wallace, Mallya uncork surprise truce

Mumbai, Aug. 9: Vijay Mallya has finally buried the hatchet with his old bete noire — the late Manu Chhabria. Mallya’s United Breweries group and Shaw Wallace, now run by Chhabria’s wife Vidya and daughter Komal Chhabria Wazir, have withdrawn a slew of cases they filed against each other in different courts in India and a case in Hong Kong.

The settlement comes a little over two years after Chhabria’s death in April 2002. Manu Chhabria was a flamboyant corporate predator who made his millions as a Dubai-based non-resident Indian before he set his eyes on blue-chip Indian MNCs like Shaw Wallace and Dunlop.

The truce between the two sides — who control between them the lion’s share in India’s spirits market — brings down the curtain on one of the most celebrated corporate dust-ups that began in the mid-eighties when Mallya and Chhabria fell out after grabbing control of Shaw Wallace.

Shaw Wallace today announced that all disputes between the UB group, headed by Vijay Mallya, and Shaw Wallace, managed by the Jumbo group, had been resolved. It signalled the end of a series of legal cases, some of which date back to the 1980s.

Shaw Wallace chairperson Vidya Chhabria said: “Shaw Wallace has a singular agenda of continued leadership in the alcoholic beverage industry. Disputes tend to distract from positive and constructive action. This settlement will help us focus more sharply on our primary business objective.”

Mallya was not available for comment. A UB group spokesperson said: “We have no comment to offer.” Clearly, Mallya is focused on bigger issues nowadays, said an observer who has been tracking the rivalry. Mallya is now focused on the aviation business and has already announced plans to launch a carrier called Kingfisher Airlines.

The truce with Shaw Wallace does not, however, signal the end of the battle that Mallya has been waging with Manu’s younger brother Kishore Chhabria with whom he had joined hands after his breakup with Manu. Mallya and Kishore have been trying to settle their dispute over the ownership of Herbertsons, a Mallya group company in which Kishore controls more shares than the UB group.

The most critical of the litigations between Mallya and the Manu Chhabria family was a suit at a Hong Kong court filed by two Hong Kong-based companies, Alexina Investments and Sovereign Nominees. Manu Chhabria, Jumbo International Holdings, Keysberg and some other Hong Kong-based companies associated with the Jumbo Group were the respondents. The plaintiffs had claimed 50 per cent ownership in Carrasco, which was the special purpose vehicle created to acquire shareholding in Shaw Wallace in the mid-1980s. After over a decade of litigation, both sides filed consent terms in the court on June 18 this year upon which the court of first instance dismissed the case.

In India, the principal dispute between the two parties has been over the shareholding acquired by McDowell & Co and UB Holdings in Shaw Wallace in the mid-nineties and 2002. It was on the basis of this shareholding that McDowell & Co had approached Bombay High Court in 2002 seeking an injunction against the business restructuring at Shaw Wallace in its bid to form a joint venture with SABMiller, the world's second-largest brewer. McDowell & Co has since withdrawn its civil suit from Bombay High Court. Moreover, both McDowell and UB Holdings have disposed of there entire holding in Shaw Wallace.

In a reciprocal gesture, Shaw Wallace has also withdrawn its petition to the Company Law Board and Calcutta High Court seeking to nullify McDowell's share acquisition in Shaw Wallace.

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