Cosmetic products manufacturer Bo International has taken legal action against Mensa Brand Technologies for its alleged failure to fulfill obligations outlined in a business transfer agreement signed by both parties in 2021.
In a petition filed with the Delhi High Court, Aayush Gupta, CEO of Bo International, stated that his company intends to initiate arbitration proceedings against Mensa. Bo International sought a court directive instructing Mensa to maintain the status quo concerning the agreement for the sale of the brand Florana. Gupta also requested a deposit of Rs 26.95 crore.
According to the plea reviewed by Moneycontrol, Bo International entered into an agreement with Mensa’s subsidiary, Caleum Arpit Brand Technologies, in December 2021 to acquire the aromatherapy and natural personal care brand Florana.
As per the agreement, Mensa was supposed to make payments to Bo International in two installments. The first installment of Rs 10.2 crore was to be paid six months after the signing of the agreement. The second part was a revenue-linked consideration, which was to be paid as a percentage of the product’s sales until 2026.
Furthermore, it was agreed that Bo International would manufacture, store, and deliver the products to Mensa.
The plea states that the value of the Florana business was estimated to be approximately Rs 30 crore at the time of signing the agreement. However, Bo International claims that Mensa has only paid Rs 10.2 crore as the first installment and Rs 5.69 crore as the revenue-linked consideration to date, leaving outstanding payments for the sale of Florana.
Bo International also alleges that Caleum had projected a revenue-linked consideration of Rs 404 crore, stating that Florana would reach new heights.
The plea further asserts that Gupta was asked to sign a document in April accepting Rs 3 crore as a final settlement for all dues. However, Gupta refused to sign the final settlement agreement and instead sent a notice under the Insolvency and Bankruptcy Code to recover Rs 1.83 crore, the amount Bo International claims is owed by Caleum for supplied products.
Bo International claims that Mensa’s marketing efforts to develop the Florana brand were insufficient. In March 2023, Mensa and its affiliates removed all Florana-related products from online marketplaces such as Amazon. As a result, the revenue generated from the brand significantly declined, leading to a decrease in the revenue-linked consideration payable to Bo International.
According to the plea, Caleum has not made any payment since March 2023.
Gupta stated that since Mensa has full control over the Florana brand, he felt compelled to approach the Delhi High Court to prevent Mensa from taking preemptive steps to terminate the business agreement regarding Florana and the contract manufacturing agreement.
Mensa has denied the claims made by Gupta and Bo International. In a statement, Mensa said, “Caelum Arpit and its representatives are being harassed with frivolous complaints and litigation. As the matter is sub-judice, we would respectfully like to refrain from commenting on the exact nature of the dispute. Needless to say, we will pursue every remedy that is available to us under the law.”
