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regular-article-logo Thursday, 23 May 2024

Legal hurdle to tea garden hunt for investors

The former majority promoter of Darjeeling Organic Tea Estates Pvt Ltd has received an interim injunction restraining the company from selling properties

Sambit Saha Calcutta Published 22.08.22, 04:06 AM
Representational image.

Representational image. File photo

Darjeeling’s second largest tea estate owning company’s plan to rope in new investors to tide over the acute financial crisis which has crippled production amidst mounting workers’ wage dues has run into a legal roadblock.

The former majority promoter of Darjeeling Organic Tea Estates Pvt Ltd (DOTEPL), the company that owns 10 estates in Darjeeling hills, including the marquee gardens Happy Valley and Ambootia, has received an interim injunction restraining the company from selling properties.

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Sanjay Prakash Bansal and Reema Bansal, who used to own 100 per cent of the company till about 2011, before the Darjeeling district court, filed the title suit. The Bansals are now a minority shareholder, having ceded the control of DOTEPL to a clutch of European investors in 2020.

Even though the comoany is challenging the order before a higher court, it may turn the process of getting new investors tricky in a reasonably good time. “…the ad interim injunction petition is heard, considered and allowed. The defendant No. 1 (DOTEPL) is hereby restrained from alienating the suit properties in favour of third party till the next date,” the order of civil judge (senior division), Darjeeling read.

The injection came at a time the company was trying to arrange funds by getting new investors on board to restore order at the gardens amidst calls from the local political parties and unions to get a new management to run the show.

Payment of wages for three fortnights are pending for a large section of 7,000 workers the gardens employ in the hills. Moreover, the annual bonus before the Puja would be payable in 2-3 weeks. On Saturday, Rembert Biemond, acting chairman of DOTEPL and the representative of European shareholders, told this newspaper that the company would do everything it can to save the livelihood of the workers and the tea gardens.

Suggesting that Europeans have supported the company for long, Biemond said that these investors have lost “astronomical sums of money” already and pegged the foreign investment in DOTEPL at about Rs 700 crore from 2011 onwards. He also disclosed that a set of new investors who were being coaxed to join has backed out despite signing memorandums of understanding.

If the MoUs were followed through, the company would have received the required working capital to run the operation effectively. The company is now trying to get a new set of investors, Biemond added.

War of words

Bansal in his petition stated that DOTEPL was not paying its dues to the banks that have initiated legal proceedings against the company and also dragged Bansal into the proceedings.

It was alleged that the three gardens were sold at a low price but the entire amount was not used to pay up the loans. He was also said to be personal guarantors to various credit facilities obtained by the company. Biemond said that the proceeds from the sale of the three smaller gardens stabilised the operation for a while and also reduced debt to the banks. Moreover, it also reduced the personal guarantee exposure of Bansal.

When taking over the management from Bansals, the foreign investors had pointed out that the move was necessary to ringfence the company from financial problems of other Bansal entities and stabilise DOTEPL which was facing an acute funds crunch. On Saturday, Biemond launched a vicious attack on former majority owner Bansal.

“He has betrayed the foreign investors who I represent, who had invested more than Rs 400 crore during the last six years.” Biemond wrote.

“The money left the company through the backdoor — Bansal is no longer a director and only a very small shareholder now (less than 3 per cent). (There are) Many court cases against him and other companies from his network are under way. A number of his companies are under NCLT procedures,” Biemond added. When contacted, Bansal said he did not want a media trial on the matter.

“The matter is in court. However, everyone knows about my credentials. I have opened many closed gardens. The new management has sold gardens. The operation at the gardens and the marketing collapsed. Production is down by 70 per cent,” Bansal added. Sources said the banks have exposure of close to Rs 200 crore in DOTEPL, which includes an Assam garden. The turnover of the company has been range bound at Rs 80- 100 crores.

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