Dubai Court Upholds AED 25.07 Mn Ruling Against Honasa In Distributorship Dispute

The Dubai court rejected appeals from both Honasa Consumer and its former distributor RSM General Trading, upholding the initial judgment issued by the court of first instance on May 16, 2024.

This ruling ordered Honasa to pay AED 25.07 Mn (around INR 57 Cr) in damages to RSM for the alleged unlawful termination of their distributorship agreement. 

Following the May ruling, the Dubai court also mandated the attachment of Honasa’s assets in the UAE as part of the enforcement of this judgment. 

This order was reaffirmed in the subsequent ruling of October 5. After this ruling, Honasa clarified that it does not own any assets in the UAE.

Citing the recent judgement passed on October 15, Honasa in an exchange filing said, “the Court of Merits at Dubai on October 1 rejected the grievance filed by both the parties, including RSM General Trading’s demand to cancel the trading licence of Honasa’s subsidiary, Honasa Consumer General Trading LLC in Dubai.”

Honasa further said that it will file an appeal against the judgement of the Dubai Court within 30 days before Dubai’s Supreme Court (Cassation Court). 

It also outlined that appeal costs of AED 1000 are not final until the supreme court in Dubai passes its final judgement. 

This is not the first instance of the Dubai court upholding its previous judgement in this case. Earlier this month, the court upheld its order directing the attaching assets of the D2C brand’s parent. 

The discourse of dispute between both parties has taken several turns over the period and the court’s decisions in India and Dubai seem to contradict themselves. 

Earlier this month, Honasa in its filing also pointed out that it is in the process of initiating contempt proceedings against RSM General Trading in the Delhi HC for failing to comply with the court’s ruling.  

For the uninitiated, the Delhi HC’s order in August not only asked RSM General Trading to revoke its execution proceedings in Dubai against Honasa but also 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. 

The order then pointed out that if the Dubai court still enforces the order against Honasa, the Delhi High Court will release the money to the D2C brand. 

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.

On the financial front, the D2C major 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.

Operating revenue grew 19.3% on a year-on-year (YoY) basis and 17.3% sequentially to INR 554 Cr in the reported quarter.

Shares of Honasa ended Friday’s trading session at INR 422.25 on the BSE, down 0.48% from the previous close.