Bo International Sues Mensa Brands Over Breach Of Contract

Cosmetics maker Bo International has filed a lawsuit against the Indian roll-up ecommerce unicorn Mensa Brands, over the latter’s reported failure to perform its obligations as per a 2021 business transfer agreement.

Per the petition filed by Aayush Gupta, Bo International’s CEO, the company intends to initiate arbitration proceedings against Mensa. Gupta wants the court to direct Mensa to maintain the status quo of the agreement for the sale of Florona. 

He also has sought a deposit of INR 26.95 Cr, per a Moneycontrol report. 

Citing plea documents, MC reported that Bo International entered into an agreement with Mensa’s subsidiary Caleum Arpit in December 2021 to buy Florona.

The roll-up ecommerce unicorn was supposed to pay Bo International in two tranches, with the first payment of INR 10.2 Cr to be made six months after signing the deal. The second payment was a revenue-linked consideration, which, according to Bo, was payable as a percentage of the product’s sales till 2026.

The agreement also saw Bo International agreeing to manufacture, store and deliver Florona products to Mensa. The revenue-linked consideration, however, has become a bone of contention between Bo International and Mensa Brands.

The Revenue-Linked Consideration

MC reported that the Florona business was valued at INR 30 Cr, with Mensa Brands having paid INR 10.2 Cr as the first tranche and INR 5.69 Cr as a revenue-linked consideration so far.

Among the many allegations levelled by Bo International against Mensa, there was the allegation that the payout plan indicated a revenue-linked consideration of INR 404 Cr.

Bo International also claimed that Mensa’s marketing efforts to develop the Florona brand were insufficient. Florona products were removed by Mensa and its affiliates from online marketplaces in March 2023, Bo International claimed.

The move led to a fall in revenue generated by Florona, which further led to a fall in the revenue-linked consideration payable to Bo International. The company also claimed that Caleum didn’t make any payments after March 2023.

However, Mensa has denied the claims made by Bo International and Aayush Gupta regarding Florona. “We deny the claims made by Aayush and Bo International. Caelum Arpit and its representatives are being harassed with frivolous complaints and litigation,” said a Mensa spokesperson.

“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,” the spokesperson added.

It was also reportedly alleged by Gupta that he was asked to sign a document in April 2023 to accept INR 3 Cr as a final settlement towards all dues, which he claimed he refused to sign. Gupta reportedly sent a notice to Caleum under the Insolvency and Bankruptcy Code for the recovery of INR 1.83 Cr, the amount that Bo International claims it is owed by Caleum for products supplied.

Mensa Brands announced the deal to acquire a majority stake in Florona on January 12, 2022, marking Mensa’s 16th acquisition since it started operations in July 2021.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.