Axed ex-chief Kapoor may seek Rs700 cr from Micromax
18 April 2016
Having failed to reach a settlement over his firing by phone maker Micromax last year, the former chairman Sanjay Kapoor may file a claim of Rs600-700 crore against the company for wrongful dismissal.
According to an Economic Times report citing people aware of the matter, this will likely be submitted to a three-member tribunal headed by former Supreme Court judge B P Singh as Kapoor seeks to press his claim to stock options in India's second-biggest handset maker after Samsung.
Micromax confirmed the panel had been formed after Kapoor invoked the arbitration clause in the Key Managerial Personnel Agreement under which disputes are referred to a three-member tribunal. Its first hearing will be on 10 May. The company declined to elaborate on future proceedings in the case.
After his acrimonious exit, Kapoor and the company's promoters had been negotiating a severance package since January. "Kapoor made an offer which was unacceptable to Micromax," said one source, without elaborating. "Hence, Kapoor has invoked the clause of three-man arbitration."
As per his employment contract, Kapoor is said to be entitled to 3.5 per cent of the company's value under an employee stock option plan and a 1.5 per cent bonus. Micromax is not listed.
Micromax cofounder Rahul Sharma had earlier told ET that the company would clock a revenue of around $2 billion (Rs13,600 crore) in the year ended 31 March.
Former Airtel chief executive officer Kapoor was hired in June 2014, along with other senior executives, to professionalise the management. However, differing working styles led to a breakdown in the relationship between him and the promoters, who have regained full operational control. The company had alleged inflated expense claims as reason for the dismissal, an accusation Kapoor vigorously denied.
Along with Singh, the tribunal will have Devinder Gupta, former Andhra Pradesh High Court chief justice, and V S Agarwal, former Delhi High Court judge. Gupta has been appointed by Micromax and Agarwal by Kapoor's team. The matter needs to be resolved in a year.
Kapoor declined to comment on the matter as it's sub judice. The former chairman had sent a notice to Micromax invoking the three-judge arbitration panel to resolve the issue. Proceedings will be confidential.
The Micromax board acknowledged Kapoor's resignation at a meeting on 1 August. Employee stock options issued to him were revoked the same day. Kapoor denied the allegations made by the company and said his termination - through a 10 July letter - was uncalled for and arbitrary.
In September 2015, Kapoor moved the Delhi High Court against Micromax for not paying him the value of shares he said were due to him. He challenged the ouster and moved the court to appoint a sole arbitrator to decide the dispute between him and Micromax. The Delhi High Court had earlier this year asked both parties to resolve the dispute amicably and appointed a mediator in January. However, the mediation talks fell through.
The dispute is currently pending in the Delhi High Court and will next be heard on 13 May.