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Hershey files winding up petition against Lokmangal Sugar

23 December, 2016

Hershey India Pvt Ltd, the maker of Jumpin juices and Brookside chocolates, has filed a winding up suit in the Bombay High Court against Maharashtra-based sugar manufacturer Lokmangal Sugar Ethanol and Co-generation Industries Ltd to recover around Rs 4.7 crore.

“Hershey’s India has filed a petition against Solapur-based Lokmangal in order to recover damages caused by Lokmangal due to non-deliverance of agreed upon products,” said a release issued by the local subsidiary of US confectionary and chocolate company Hershey.

Lokmangal Group was founded by Subhash Deshmukh, who is a cabinet minister for cooperation, marketing and textile in Maharashtra government from the ruling BJP. Along with sugar and other agriculture products, Lokmangal Group has interests in banking, infrastructure and education as well.

According to the Bombay High Court website, the case was filed on 7 September and the first hearing will come up on 1 March 2017. The confectionery and chocolate syrup maker has filed the case under the Sections 433, 434 and 439 of Companies Act, which deals in winding up of the company in case a company fails to obligate its dues.

“Hershey’s India and Lokmangal Sugars and Ethanol had entered into an agreement in 2015 whereby Lokmangal would supply a predetermined quantity of sugar to Hershey’s at a mutually decided price,” said the company release further adding that, “at the time of signing of the agreement, Lokmangal had assured in writing that it would set aside and store separately the quota allocated to Hershey’s as per the agreement.”

An email query to Hershey remained unanswered while several phone calls to the company did not elicit any response. When contacted, a senior official of Lokmangal Group said we have just received the notice and our legal team is looking into the matter. 

“Lokmangal had delivered about 40% of the sugar to Hershey’s and informed them that they were unable to deliver the balance. On being asked to reimburse the remaining money (approximately Rs. 4.70 crore), Lokmangal has pleaded financial crunch,” said Hershey. “As per the agreement, in case Lokmangal fails to honour the supply commitment, it would reimburse the remaining amount at current market price to Hershey India.”

The court registrar on 29 November directed Hershey to serve the notice regarding filing of the case to Lokmangal by registered post by 24 January 2017.

“When a company fails to pay any debt which is over Rs 500, the lenders can file this suit,” said Chandubhai Mehta, managing partner of Mumbai-based law firm Dhruve Liladhar & Co. “However, the lenders here will have to prove that the company is indeed unable to fulfil its obligations.”

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Hershey files winding up petition against Lokmangal Sugar

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