Reliance Infrastructure Ltd, along with its wholly-owned subsidiary Reliance Defence Systems Pvt. Ltd, has issued an arbitration notice against the founder promoters of Pipavav Defence and Offshore Engineering Company Ltd.
The arbitration notice was issued against Nikhil Gandhi, Bhavesh Gandhi and their companies SKIL Infrastructure Ltd, Grevek Investments and Finance Pvt. Ltd and SKIL Shipyard Holdings Pvt. Ltd, RInfra said in a stock-exchange disclosure on Monday.
Reliance’s disclosure, however, does not provide details about the warranty, which was allegedly breached by the seller.
The case was filed at the arbitration tribunal, according to the Singapore International Arbitration Centre Rules. Indemnity clauses under a share-purchase agreement protect the buyer from the breach of warranties by the seller.
In a separate filing on Tuesday, Nikhil Gandhi-led SKIL Infrastructure said that it had issued a notice to Reliance Infrastructure and Reliance Defence Systems for breaching the same purchase agreement. It has claimed losses to the tune of Rs 8,130 crore ($1.25 billion).
In response to the arbitration notice sent by RInfra, SKIL Infrastructure denied any breach of agreement.
According to share-purchase agreement, Reliance Infrastructure and its wholly-owned subsidiary Reliance Defence Systems had agreed to acquire a 17.66% stake in the company from the then promoters of Pipavav Defence.
The mandatory open offer to acquire a 26% stake from public shareholders of the company was also announced.
In the open offer, Reliance Defence Systems had acquired an 18.84% stake in the company for Rs 965.30 crore, which included interest of Rs 49.80 crore. Subsequently, it had acquired an 11% stake from the promoters for Rs 512.76 crore to become the sole promoter, according to the company’s annual report.
Incorporated in 1997, Gujarat-based Pipavav Defence was rechristened Reliance Naval and Engineering Ltd, after the company was acquired by Reliance. As on 31 December 2017, Reliance Defence Systems held a 30.3% stake in Reliance Naval and Engineering – the first private sector company in India to obtain the licence and contract to build warships.
It operates an integrated shipbuilding facility with largest dry dock in the country. The facility houses a modular shipbuilding facility with a capacity to build fully-fabricated and outfitted blocks. The facility is spread over 2.1 million sq ft, according to the company.