Dubai Court refused to cancel Honasa Consumer trading license
On December 22, Dubai Court of Appeals rejected appeals filed by Honasa Consumer and its distributor RSM over respective grievances. Court ordered to attach assets of Honasa in UAE and refused to cancel trading license of its Dubai entity, while suspending the proceedings.
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Amidst the strings of distribution-related fiasco, the Dubai Court of Appeals has refused to cancel Honasa Consumer General Trading LLC (Honasa's Dubai entity) trading license and has ordered to attach assets of the Company in the UAE, while suspending the proceedings.
According to the judgment dated December 10 (received on December 22), passed by the Appeal Court, "the Court rejected the appeals filed by both the parties (Honasa Consumer and its UAE distributor RSM General Trading) and has ordered to attach assets of the Company in UAE and refused to cancel the trading license of Honasa Dubai Entity (“Appeal Court Order”)."
However, while informing the stock exchanges in India, Honasa noted that "this order stands unenforceable since the Delhi High Court had directed RSM to file a request before the Appeal Court for suspension of the precautionary attachment proceedings. Appeal Court, upon RSM’s request, suspended the precautionary attachment proceedings.
There shall be no material financial impact on the Company, due to the Delhi High Court Order and since the Company has no assets located in UAE."
Earlier this year, in the ongoing litigation between Honasa Consumer and RSM General Trading, RSM had filed a lawsuit in the Dubai Court for unlawful termination of its distributorship by the Company.
In furtherance of the same, the Dubai Court on June 6, upon RSM’s precautionary attachment application, allowed to attach the Company’s assets in UAE, however, it categorically rejected to cancel the trading license.
Both the Company and RSM filed respective grievances against the Precautionary Attachment Order which were rejected by the Dubai Court on October 1, 2024. The Company and RSM further appealed the Dubai Court Order before the Court of Appeals.
It is to be noted that the Delhi HC had granted anti-enforcement injunction to the Company against which RSM filed an appeal. In this Indian Appeal, the Delhi High Court directed RSM to make a request before the Appeal Court for suspension of the Dubai Court Order and to not execute the original judgment passed by the Dubai Court in UAE or any other jurisdiction until the disposal of Indian Appeal.
To this, RSM filed a request before Appeal Court to suspend the precautionary attachment proceedings as directed by the Delhi HC. The Appeal Court suspended the proceedings, and hence, the Appeal Court Order stands unenforceable.
This suspension will continue till the Indian Appeal is decided by the Delhi High Court.
Further, the Company has filed an appeal before the Cassation Court against the original judgment passed by the Dubai Court, and till its pendency, no execution proceedings can be initiated by RSM in UAE.
