In a legal battle involving two cooperatives, the Krishak Bharti Cooperative Ltd (Kribhco) has returned Indian Farmers Fertiliser Cooperative Ltd's (Iffco) shares held by it in Iffco Tokio General Insurance Co Ltd (ITGI), a joint venture between Iffco and a Japanese non-life insurance company. | |
| Kribhco had held 20 per cent shares, valued at Rs 23.17 crore, in ITGI, a joint venture between Iffco and Tokio Marine and Fire Insurance Company Ltd. |
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| This was done after the Delhi High Court dismissed fertiliser manufacturer Kribhco's suit which had sought a declaration that it continued to be an associate of Iffco for the purpose of the joint-venture agreement and continued to hold 20 per cent equity in it. |
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| While the government holds more than 60 per cent equity in Kribhco, the rest is held by other cooperative societies including Iffco, which has a share capital of 19 per cent in it. On the other hand, Kribhco holds an equity of Rs 5 lakh in Iffco. |
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| In 2000, Iffco entered into a venture with Tokio Marine and Fire Insurance Company Ltd, with shareholding in the ratio of 76:24. The shareholding was to be held either directly or through their respective affiliates or associates. |
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| Kribhco, after submitting an affidavit as co-promoter of ITGI, had obtained a registration certificate from Insurance Regulatory Development Authority. The society, after investing Rs 20 crore in the JV, was allotted shares with distinctive numbers. |
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| However, after the Multi-state Cooperative Societies Act, 2002 came into effect in August 2002, the scenario changed. The Act barred any multi-state cooperative society from being on the board of another multi-state cooperative society if the two were in competition with each other. |
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| In view of this Act, the Central government had issued a direction to Kribhco to amend its bylaws and remove Iffco nominees from its board and repatriate its entire equity stake in it. Accordingly, Kribhco had returned Iffco 's equity contribution of Rs 97 crore in it and Iffco had also returned Kribhco 's equity contribution of Rs 5 lakh in it. |
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| According to Iffco counsels A S Chandiok and Rajiv Bansal, as Kribhco had ceased to be Iffco's associate, it had to transfer back its shareholding in ITGI to Iffco. Iffco had also sought to remit Rs 23.17 crore towards the supposed fair market value of 20 million shares held by Kribhco in ITGI. |
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| Counsel Sunil Gupta along with Rajiv Nayar, appearing for Kribhco, had maintained that despite statutory change Kribhco continued to be an original subscriber and allottee of ITGI shares and its status as an associate of Iffco and that of an original promoter member remained unaffected. |
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| On the other hand, Iffco had informed the court that by a settlement agreement Tokio Marine shares had been transferred to Millea Holdings and Millea Asia and that Kribhco's name had been struck off. |
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