Cosmetic products maker Bo International has initiated litigation against Mensa Brand Technologies over the latter’s failure to perform its obligations as per a business transfer agreement that the parties signed in 2021.
Aayush Gupta, CEO of Bo International, in his petition, filed in the Delhi High Court said that his company intends to initiate arbitration proceedings against Mensa. It wanted the court to direct Mensa to maintain the status quo related to the agreement for the sale of its brand Florona. Gupta has also sought a deposit of Rs 26.95 crore
According to the plea, which Moneycontrol has reviewed, Bo International entered into an agreement with Mensa's subsidiary Caleum Arpit Brand Technologies in December 2021 to buy aromatherapy and natural personal care brand Florona.
Mensa was to pay the money to Bo International in two tranches. First, Rs 10.2 crore was to be paid six months after the signing formalities. The second part was a revenue-linked consideration, which, according to Bo International, was payable as a percentage of the product’s sales till 2026.
It was also agreed that Bo International would manufacture, store and deliver the products to Mensa.
IBC notice
According to the plea, the Florona business was valued at about Rs 30 crore at the time of signing the agreement. However, Bo International said Mensa paid Rs 10.2 crore as the first tranche and Rs 5.69 crore as the revenue-linked consideration to date, as a result of which Bo International has not received full payment for the sale of Florona.
Bo International has also alleged that As Caleum had claimed that Florona will soar to new heights, and the payout plan indicated a revenue-linked consideration was Rs 404 crore.
The plea also alleges that Gupta was asked to sign a document in April accepting Rs 3 crore as a final settlement towards all dues. Gupta, however, refused to sign the final settlement agreement and sent a notice under the Insolvency and Bankruptcy Code for the recovery of Rs 1.83 crore, the amount that Bo International claims it is owed by Caleum for products supplied.
Bo International claimed that Mensa’s marketing efforts to develop the Florona brand were insufficient. In March 2023, Mensa and its affiliates removed all products associated with Florona from online marketplaces such as Amazon. As a result, the revenue generated from the brand nosedived, which led to a fall in the revenue-linked consideration payable to Bo International.
According to the plea, Caleum has not made any payment after March 2023.
Gupta said that since Mensa has full control over the Florona brand, he was constrained to approach Delhi High Court to prevent Mensa from taking pre-emptive steps to terminate the business agreement in relation to Florona and the contract manufacturing agreement.
Mensa denied the claims made by Gupta and Bo International.
“Caelum Arpit and its representatives are being harassed with frivolous complaints and litigation. As the matter is sub-judice, we would respectfully like to refrain from commenting on the exact nature of the dispute. Needless to say, we will pursue every remedy that is available to us under the law," Mensa said in a statement
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