Delhi HC Directs Honasa’s UAE Distributor To Revoke Its Execution Proceedings In Dubai 

Days after the Delhi High Court imposed interim stay on Dubai court’s order to Honasa Consumer over INR 57 Cr compensation, the court has now instructed the company’s former distributor RSM General Trading to revoke its execution proceedings in Dubai against Honasa.

Besides, the court also directed RSM General Trading to deposit INR 57.17 Cr along with added interest in the registry of Delhi HC until the withdrawal of execution proceedings in Dubai against Honasa. 

RSM General Trading was Honasa’s distributor in the Middle East and African region between July 30, 2020 and January 17, 2023.

If the Dubai court still enforces the order against Honasa, then the Delhi High Court will release the money to the company, as per a filing. 

“The order is granted in favour of the petitioner and shall have a positive impact on the financials as it provides protection against execution of the decree passed by Court of First Instance in UAE, Dubai,” the filing added.

Earlier, in May UAE’s Court of full Commercial Jurisdiction ordered Honasa to pay a compensation of AED 25.07 (around INR 57 Cr) Mn as damages to RSM General Trading Agency. Apart from this, it also directed the company to pay legal interest at a rate of 5% (from the date the judgement becomes final until full payment is made) and AED 1,000 (INR 22,665) as attorney fees. 

It is pertinent to note that Honasa also filed a petition in the Dubai Court challenging the previous erroneous decree. On this, the company in a statement in BSE read that the appeal shall remain in force and will be heard accordingly.

On the development, Honasa told Inc42, “Honasa Consumer Limited appreciates the order passed by the Delhi High Court dated August 20, 2024, concerning the ongoing litigation with RSM General Trading LLC. The Company remains committed to resolving this matter in accordance with legal procedures and continues to prioritize its business operations and stakeholder interests.”

At the heart of this fiasco is Honasa severing its ties with RSM General Trading a few months before its listing in the Indian market. 

The company was on the lookout for international expansion into countries like Bangladesh, Malaysia, Vietnam, and Thailand ahead of its IPO in October last year. 

Meanwhile, it was also eyeing increasing its geographical penetration in the UAE through strategic acquisitions or organic growth. With the Dubai Court’s ruling, these plans were also put on hold given that the company terminated its contract with RSM General Trading.

Founded in 2016 by the husband-wife duo Varun and Ghazal Alagh, Honasa’s product portfolio comprises six beauty and personal care brands which include Mamaearth, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s.

Honasa Consumer posted a 62.9% jump in its profit after tax (PAT) to INR 40.2 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25) from INR 24.7 Cr in the year-ago quarter on the back of an increase in the sales of its beauty products.

Mamaearth’s operating revenue witnessed a strong growth of 19.3% on a year-on-year (YoY) basis and 17.3% sequentially to increase to INR 554 Cr in the reported quarter.

Shares of Honasa closed Wednesday’s trading session at INR 468 on the BSE, a marginal increase from the previous closing of INR 465.30.