Anil Ambani-led Reliance Infrastructure Ltd on Monday said the company and its wholly-owned subsidiary Reliance Defence Systems Pvt. Ltd have issued a Rs5,440 crore arbitration notice to founder-promoters of erstwhile Pipavav Defence and Engineering Ltd, citing a breach of warranties..
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Exactly two years ago, Reliance Defence had bought Pipavav Defence, India’s largest shipyard, from the Gandhis of SKIL Infrastructure Ltd. Later, it bought another 26% stake in the company through an open offer.
In a stock exchange filing, Reliance Infra said it is making indemnity claims of Rs5,440.38 crore under the purchase agreement dated 4 March 2015 against Nikhil and Bhavesh Gandhi and their companies SKIL Infrastructure, Grevek Investments and Finance Pvt. Ltd, and SKIL Shipyard Holdings Pvt. Ltd.
Reliance Infra did not disclose the nature of these breaches.
“The company has discovered that there have been serious breaches of warranties and representations made by the founder-promoters (of Pipavav Defence). As per the share purchase agreement, we are entitled to claim the loss caused in an arbitration,” said a person aware of the development, on condition of anonymity.
Warranties are assurances of the state of affairs and governance standards of the company, and any breach can lead to a claim.
Reliance Infra is convinced of the breaches discovered and is therefore compelled to enforce its rights, this person added.
Reliance Group declined to furnish additional details.
Calls and messages received no response from Nikhil Gandhi, founder-chairman at Pipavav Defence.
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