Chitalias Make Peace Overtures To Itc, Govt

Suresh and Devang Chitalia, ITCs former US partners who are now embroiled in bitter court battles with the Indian company, are now extending olive branches to both ITC and the Indian government.

The Chitalias, who recently suffered a setback in their attempt to claim punitive and defamatory damages from ITC, have asked several ITC directors for a meeting to resolve the slew of court cases filed by the estranged partners. They have offered a meeting and hopefully can come up with a settlement, Chitalia lawyer William Handler confirmed to Business Standard.

Without naming specific directors, Handler said his clients had approached new people on the ITC board. We have to talk to people who hopefully have the general shareholders interests and will be more inclined to listen, not to those who have their personal interests at stake, he said.

 

The new directors will be able to get the full picture, the New Jersey-based attorney said, underscoring that the Chitalias would continue to contest ITCs charges. ITC has sued the Chitalias for nearly $16 million as compensation for alleged advances that were reportedly not repaid.

Handler would not discuss the possible contours of an out-of-court settlement. The Chitalias are also pursuing discussions with the Indian government for a deal that could possibly include immunity from prosecution in India.

Cagey about commenting on the discussions, Handler would only confirm that the request for immunity was part of a package being discussed over a period of time. The Indian Enforcement Directorate is yet to make any firm offers.

The Chitalias are bargaining from a weaker position than that a month ago. Last month, a New Jersey district magistrate dismissed the Chitalias claim of $41.9 million in punitive and defamatory damages.

The judge, even as he pointed out that the Chitalias may have been too hasty in suing for defamation without waiting for a verdict on their allegations, poked holes in their bid to claim compensation for companies, that the Chitalias said, were controlled by ITC. One cannot have it both ways, the district magistrate said.

ITC, however, is still fighting the bulk of the Chitalias allegations, including charges that it failed to compensate the father and son duo for millions of dollars in a host of joint business ventures.

Among other allegations, the Chitalias are claiming $1.4 million as compensation for buying out other investors in ITCs failed attempt to introduce the Bukhara restaurant chain to the US, and for cashew processing, and pysllium husk processing.

Meanwhile, there has been no progress yet in Handlers attempt to question senior ITC officials, including chairman Yogi Devesh-war. The Chitalia lawyer had told Business Standard last month that ITC was reluctant to make senior officials available for depositions on the case.

ITC Classic bailout plan

Tobacco major ITC Ltd is agreeable to fund its ailing financial services associate ITC Classic up to Rs 450 crore if it finds the revival plan sustainable. Of this amount, Rs 250-280 crore will be funds backed by assets. The Classic board meets today to discuss the revival plan.