Suzuki Challenges Govt On Maruti Chairman Issue

Suzuki Motor Corporation (SMC) has challenged the government at the International Court of Arbitration (ICA) for continuing with its nominee as chairman of the joint venture Maruti Udyog Ltd (MUL).

The Japanese partner in the Rs 8,000 crore company has written to the Paris-based dispute settlement body saying that the Indian government could not continue with its nominee Prabir Sengupta as part time chairman beyond 1997.

SMC has sought to include the dispute over the chairman issue in its original petition questioning the appointment of RSSLN Bhaskarudu as managing director.

While SMC could not be contacted, Sengupta said he would not like to comment on the matter.

 

The company is even believed to have submitted a draft on the terms of reference for the arbitration case that is clouding the future programmes and introduction of new models by MUL, which presently has over 80 per cent marketshare in the car market.

After the September 22, 1997, annual general meeting (AGM), SMC vice president Yoshio Saito had said that the Japanese company would not challenge the AGM proceedings in court.

On its part, the government has apparently decided not to react to the fresh salvo fired by the Japanese company and has not touched the issue of chairmanship so far, government sources said on condition of anonymity.

The government first wants to see that the terms of references, expected to be finalised by the three-member tribunal headed by former Canadian envoy Yves Fotier by March, and ascertain if the chairman issue would be included as part of the ongoing dispute.

We cant react to each and every issue raised subsequently by the Japanese company and we would also like to know if the fresh issue is taken as a separate case or not, the sources said.

At the contentious AGM, where the two partners were fighting a battle on a successor to outgoing managing director R C Bhargava, the government side had surprised SMC by announcing that it was entitled to continue in the chairmans post as per the joint venture agreement.

The governments position was made known at the eight-hour long meeting after the SMC sought to replace Bhargava as its nominee for the post of chairman with Yoshio Saito.

SMC has now written to the ICA that the governments five-year tenure for chairmanship should have come to an end by 1997 and it was the Indian partners failure not to have appointed a person for the post earlier.

Sengupta, who took over as part-time chairman in February 1997, was continued in the position with the government asserting that its nominee could continue till the end of his fifth AGM (in the year 2001) as per the joint venture agreement (JVA).

The three-member tribunal, including the governments nominee and former Chief Justice Y V Chandrachud and SMC nominee Lord Mustil, is yet to have a formal meeting for the finalisation of the terms of reference for deciding on the dispute.

Following the stormy AGM, every subsequent board meeting began with SMC lawyers reading out their version of the legal position of the constitution of the board and maintaining that all the decisions were subject to the outcome of the ICA ruling.

For the first time last week, the Suzuki side did not bring its lawyers to a board meeting in which the two sides cleared Rs 300 crore for a Rs 1,500 crore expansion programme.

However, no decision relating to the introduction of new models and the much-awaited corporate plan prepared by Bhaskarudu was taken, though the two sides agreed to hold another session of consultation this month on some of the remaining issues, the sources said.