Fabindia sued by subsidiary founders over exit clause

The co-founders of Fabindia Ltd's personal care subsidiary, Biome Life Sciences India Pvt. Ltd, have sued the apparel retailer in the Delhi high court, seeking to enforce an exit clause they say value their shares at ₹196.16 crore.

- Krishna Yadav & Soumya Gupta

Shantanu Jain and Sania Arora Jain, who launched Biome Life Sciences LLP in 2019 that came under the Fabindia fold a year later, said in their petition that the retailer has breached their shareholder agreement (SHA) by failing to honour a "put option" that entitled them to sell their stake under a preagreed formula. Biome houses Fabindia's personal care line of FabEssentials face washes, moisturizers, shampoos, and fragrances.

The Jains sought urgent interim relief under Section 9 of the Arbitration and Conciliation Act, requesting the court to direct Fabindia to deposit the sum in an escrow account, even as they pursue arbitration to secure their claim.

Shantanu has over two decades of experience in women's personal care products and Sania is a biochemist trained at London's Imperial College, the petition said. They launched Biome Life Sciences LLP in 2019 to develop Ayurveda-based, science-backed personal care products. Their work caught the attention of William Nanda Bissell, Fabindia's managing director and former chairman.

Bissell engaged the Jains first as consultants and later proposed a formal collaboration.

Biome Life Sciences India Pvt.Ltd was incorporated in May 2020, with Fabindia holding a controlling stake. According to the petition, the SHA between Fabindia and the founders included a put option, which allows the founders to sell their shares to Fabindia at a valuation based on revenue or Ebitda.