Super-Max Offshore Holdings v Rakesh Malhotra (Defendant and Additional Claimant) Actis Consumer Grooming Products Ltd (Additional Defendant)

JurisdictionEngland & Wales
JudgeMr Justice Popplewell,The Hon.
Judgment Date13 December 2017
Neutral Citation[2017] EWHC 3246 (Comm)
Docket NumberCase No: CL-2016-000797
CourtQueen's Bench Division (Commercial Court)
Date13 December 2017

[2017] EWHC 3246 (Comm)





Royal Courts of Justice, RollsBuilding

Fetter Lane, London, EC4A 1NL


THE HON. Mr Justice Popplewell

Case No: CL-2016-000797

Super-Max Offshore Holdings
Rakesh Malhotra
Defendant and Additional Claimant


Actis Consumer Grooming Products Limited
Additional Defendant

Camilla Bingham QC & Amy Rogers (instructed by Clifford Chance LLP) for the Claimant & Additional Defendant

Jonathan Adkin QC & Philip Hinks (instructed by Akin Gump LLP) for the Defendant

Hearing dates:: 9, 10, 11, 12, 16, 17, 18 and 19 October 2017

Judgment Approved

Mr Justice Popplewell The Hon.

These proceedings concern the fall-out from a shareholder dispute which came to a head in December 2016. The Claimant ("SMOH") is a company registered in the Cayman Islands which heads the Super-Max group. The group manufactures and distributes razor blades and associated products worldwide, mostly in India, the Middle East and Africa. The group's largest market, in terms of both sales and profit, is India, where the business was started by the Defendant's family and where it operates through a subsidiary, Super-Max Personal Care Pvt. Ltd ("SPCPL"). All its main manufacturing plants are in India. Another group subsidiary is Wesley International Ltd ("Wesley"), which is registered and based in Dubai. The group has offices in Dubai and also at Thane, near Mumbai, which is the largest of its manufacturing plants.


The Defendant ("Mr. Malhotra") is commonly known as "Rocky". He is a UK citizen and lives in Dubai, Mumbai and Los Angeles. The Super-Max group is an offshoot of a family business originally founded by his grandfather as Harbhans Lal Malhotra & Sons ("HLM") in 1945. There was a family split in 1986, with Mr Malhotra and his father forming the Super-Max group (initially under a different name) and his uncle retaining the HLM business, with which the Super-Max group competes.


Actis LLP is an English registered partnership carrying on business as a private equity investor in growth markets across Africa, Asia and Latin America. In 2011 the Actis group invested US$ 225 million in the Super-Max group through the Additional Defendant which is a Mauritian company created as a special purpose vehicle ("Actis"). At this time the Super-Max business was the second largest manufacturer of razor blades in the world, behind Gillette. Subsequently Actis has invested a further sum of almost US$ 40 million, and Mr Malhotra (indirectly) about $10 million. The investments made Actis a minority shareholder with a current equity interest of 40.17% of the ordinary shares together with additional preference shares. Mr Malhotra and his family retain a majority equity stake. At the material times Mr Malhotra's family interests have been held by a Lichtenstein foundation of which he and his family are beneficiaries, which owns the shares of a Mauritian company, Super-Max Mauritius, which in turn owns 59.83% of the ordinary shares in SMOH. Actis' economic interest in the group is much greater than its 40.17% ordinary share ownership, by reason of the group's debt to it and its preferential shareholding. Its economic interest was put at something in excess of 90%.


Actis, Mr Malhotra, SMOH and others entered into a shareholders agreement entitled Subscription and Shareholder Deed ("the SSD"), which was signed on 4 November 2010, amended on 4 March 2011, completed on 24 March 2011 and again amended on 24 July 2015. Mr Malhotra became the Executive Chairman of SMOH and the group, pursuant to the terms of a written agreement with SMOH with effect from 11 April 2011 (the "Service Contract"). Under the SSD there was to be a group chief executive officer who could only be removed with the consent of Actis.


The financial performance of the group was disappointing. Mr Malhotra attributed it to the incompetence of the CEO, Mr AnindoMukherji, and the senior management team he had put in place since his appointment in August 2014. Mr Mukherji and the senior management nevertheless continued to enjoy the support of Actis. On 18 December 2016 Mr Malhotra purported to suspend Mr Mukherji as CEO and take over the role himself, and terminated the employment of some other senior managers. This was contrary to the wishes of Actis and without its consent. Actis sought an injunction, granted ex parte by Picken J on 20 December 2016, restraining Mr Malhotra from implementing the suspension of Mr Mukherji; from implementing the suspension or removal of other employees; and from holding himself out or purporting to act as CEO. In the light of Mr Malhotra's alleged subsequent conduct, a further order was sought, and granted ex parte by Andrew Baker J, on 6 January 2017, restraining Mr Malhotra from doing various things which would or might interfere with the management of the group's business.


Actis considered various aspects of Mr Malhotra's conduct, both before and after the Court orders, to be a repudiatory breach of his Service Contract. On 10 February 2017 Actis, purporting to exercise rights under the SSD to take certain actions on behalf of SMOH, caused SMOH to treat Mr Malhotra's behaviour as gross misconduct terminating the Service Contract.


The central issue in the case is whether Mr Malhotra's Service Contract was validly terminated. Mr Malhotra challenges the suggestion that he was guilty of gross misconduct or that SMOH had any right to terminate his employment as executive chairman; and in any event disputes that Actis had the right to cause SMOH to take such action. He also advances a claim against Actis for unreasonably refusing its consent to the removal of Mr Mukherji as CEO and for wrongly purporting to act on behalf of SMOH in terminating his Service Contract.


Since the time of the purported termination, an interim arrangement has been agreed between the parties, pending the trial in these proceedings, pursuant to which, among other things, SMOH would continue to pay Mr Malhotra's salary and Mr Malhotra would cease to act as executive chairman save for certain functions.

The governing terms

Shareholder agreements: The SSD and articles of association


The SSD, which was governed by English law, put in place the following scheme for governance of SMOH and the group. An "Advisory Board" was created, which was to be the "principal governing body of the Group" (clause 17.1.5). The Advisory Board was to have seven members, being (i) Mr Malhotra (who was to act as chairman of the Advisory Board) and three persons nominated by him; (ii) two persons nominated by Actis; and (iii) one independent member, to be appointed by agreement between Mr Malhotra and Actis (clause 17.1.2). The Advisory Board was required to meet at least six times each calendar year at intervals of not more than two months (clause 17.1.4), and would only be quorate if there were three directors present including at least one Actis nominee and one Malhotra nominee (clause 18.4.1). The composition of the boards of directors of SMOH and each group company was to follow the structure of the Advisory Board: (i) Mr Malhotra was entitled to appoint four directors; (ii) Actis was entitled to appoint two non-executive directors; and (iii) there was to be one independent, non-executive director, appointed by agreement between the parties (clauses 17.2.1 to 17.2.3). Mr Malhotra was to be the executive chairman of SMOH and the group under a service contract to be agreed between Actis and Mr Malhotra on the principal terms set out in an already agreed term sheet (clause 17.2.1), provided that if his Service Contract were terminated or expired for any reason he should only be entitled to be non-executive chairman of SMOH and the group.


Save for "Reserved Matters", all decisions of the group were to be taken after giving due consideration to the advice and recommendations of the Advisory Board (clause 18.1.2), and the parties agreed to procure each group company – subject to the fiduciary duties of the directors in question – to act consistently in accordance with any resolution of the Advisory Board (clause 18.1.3). "Reserved Matters" were not to be carried out by any group company without Actis' prior written consent (clause 16.1). Such matters include (at para 5.2 of schedule 2):

"The appointment or removal of the CEO (subject to clause 18.6.1), India CEO, the CFO and the India CFO or any variation in the remuneration or other benefits or terms of service of any such person."


The SSD empowers Actis' nominated directors to prosecute rights of action on SMOH's behalf, and to instruct SMOH to exercise decisions and/or discretions, in certain circumstances:

Clause 16.3 provides:

"Notwithstanding any other provision of this Deed, the SMOH Articles of Association…and any other Transaction Document [as widely defined], any right of action which SMOH………may have against the Malhotra Parties [defined to include Mr Malhotra] shall be conducted and prosecuted on behalf of SMOH…solely by the Actis Directors. In such event, the Actis Directors shall have full authority on behalf of SMOH……to negotiate, litigate and settle any claim arising out of such right of action … and each of the parties shall use its best commercial efforts to give effect to the provisions of this clause 16.3."

Clause 16.4 provides:

"The parties agree that all decisions and discretions which may be exercised by any Group Company as against [Mr Malhotra and others] in respect of the Transaction Documents [defined so as to include the SSD and Service Contract] shall be exercised at the instructions of Actis and, the Malhotra Parties [defined to include Mr Malhotra] shall not, and the Malhotra Parties shall procure that each member of the Group shall not, vary, novate,...

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    • 15 February 2019 the exclusion of other directors: see In re H R Harmer Ltd [1959] 1 WLR 62, 90, and Super-Max Offshore Holdings v Malhotra [2017] EWHC 3246 (Comm), at [116(2)–(4)] and [118]. The first of these decisions concerned a petition under section 210 of the Companies Act 1948 (with the old tes......
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    • 15 October 2019 2 The Defendant was, until his dismissal for gross misconduct (as found by Popplewell J in his judgment of 13 December 2017 [2017] EWHC 3246 (Comm) at 117–118), the Executive Chairman of Super Max Offshore Holdings (“SMOH”) (the First Claimant), and he remains non-executive Chairman un......
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