Plintron

Lycamobile UK Ltd vs Plintron Mobility Solutions, January 27, 2020, C.S.No.372 [12] in the High Court of Judicature at Madras, Chennai, India.

Lycamobile UK Ltd., represented by its Director, Mr. Premananthan Sivasamy Plaintiff, filed a suit seeking for permanent injunction against the Defendant: 1. Plintron Mobility Solutions Private Limited, represented by its Chair, Mr. Mohan Kumar Sundaram. Defendant 2. Mohan Kumar Sundaram and Defendant 3. Ms. Subhashree Radhakrishnan, from interfering with the services provided by Plintron Mobility Solutions to Lycamobile.

The case of Lycamobile UK Ltd was that the Lycamobile company, is part of a larger group of companies set up in the year 2006, among them the company LycaTech, incorporated in India to provide services to Lycamobile (Lyca Group). At that time, Defendants 2 and 3 were engaged as employees of LycaTech

With the funding by the Lyca Group in the year 2008 Lyca Technology Solutions Private Limited was incorporated with an object to carry on business in software solutions. At the time of incorporation defendants 2 and 3 were granted 8 percent sweat/loyalty equity.

Defendants 2 and 3 had approached Mr.Subaskaran Allirajah, the founder and chair of Lycamobile with a proposal to divide the activities provided by the group with the suggestion that an entity be set up in Singapore under the name and style of Plintron Holdings PTE Ltd.

However, Defendants 2 and 3 engineered the issuance of Preferred stock instead of issuing Common stock. Consequently, the control and management of the company was assumed by defendants 2 and 3.

The plaintiff had an apprehension that in the event steps were taken to seek conversion of preference shares in Plintron Holdings PTE Ltd., the defendants would use this to gain control over the holding company and disconnect the telecom services being provided by Lycamobile UK Ltd.

The parties negotiated the issue and arrived at a settlement. Accordingly, the defendants 2 and 3, Plintron Holdings PTE Ltd and Proton Global Investments Ltd have executed a shareholders agreement on 24.08.2019 by which the preference shares issued to the plaintiff's group concern were converted to equity shares with voting rights. Simultaneously, on the same day, the Lycamobile UK Ltd issued a letter withdrawing all claims.

Post conversion, the shareholding of Lycamobile in the Plintron holding company is 60 percent.

Plintron vs. Surf Telecom and Surf Telecom vs. Plintron

Plintron Holdings is said to have paid $4 million for a 40 percent stake in the Brazilian telecoms company, Surf Telecom [13] in October 2016, with the option to convert the preferred stock into common stock and the option to buy another 20 percent.

In August 2020, the 1st Business Court of Arbitration Conflicts, in Sao Palo, Brazil, suspended the Initial public offering (IPO) process of Surf Telecom, at the request of Plintron Holdings. Plintron Holdings, claimed that the IPO was a strategy to dilute its stake and thus prevent it from taking control of the company.

In the month before (July 9, 2020), Plintron had turned off the mobile telephony platform used by Surf Telecom, without prior notice and also prevented the service from being re-established, as a result MVNO clients and thousands of end-users was left with no connectivity. Surf Telecom had to migrate customers to a new platform and re-establish mobile service, which took days to fully normalize.[14]

Prosecutor Amaitê de Mello, of the 1st Criminal Court of Pinheiros, in Sao Paulo, ordered a criminal indictment against Plintron and its legal representative [15] for having interrupted “telegraphic, radiotelegraphic or telephone” services, as well as prevented its restoration. The penalty ranges from one to three years prison and a fine, however as the shutdown took place on July 9, during the coronavirus pandemic, the penalty can double.

On April 7, 2021, Surf Telecom announced [16] it had filed a request with the 1st Business Court to overturn the injunction barring the company's IPO process. In its request, Surf Telecom argue that there is an irregularity in the procedural representation and inconsistencies in the power of attorney at Plintron.

The document points out that "there was a change in the control of Plintron Holding, and there are indications that the administrators are acting behind the back of the controller, which does not even seem to know about the present litigation". Surf Telecom is referring to the settlement in the case C.S.No.372, Lycamobile UK Ltd vs Plintron, where Lyca Group now has a 60 percent stake in Plintron – but there was no ratification to the power of attorney to the representative of Plintron in Brazil.

On September 9, 2021, The São Paulo Board of Trade, acknowledged that the documents submitted by attorneys on behalf of Plintron, contained irregularities and must therefore be rejected.[17]

The Board of Trade concluded that the Power of Attorney, presented by the representatives of Plintron, show information that the company is headquartered in India and lacks the signature of the foreign partner delegating its legal representation to a third party. However, the company was sold to a group in Singapore, so the address was supposed to be in that country. This made the authority, question the legitimacy of the those who presented themselves on behalf of the group.

The document points out that "there was a change in the control of Plintron”. The change refers to the settlement in the case C.S.No.372, Lycamobile UK Ltd vs Plintron, where Lycamobile is the majority shareholder in Plintron with 60 percent.