The apex court dismissed the special leave petition filed by certain employee shareholders of Philips India Ltd early this year. This effectively clears the deck for internal recast of the company the guiding principle of which is to focus on core processes that are technology-intensive.

The proposed sale, which was hanging fire for nine months, was part of the ongoing decision of the Dutch shareholder and the Philips India directors to strengthen their competitive position in all the market segments.

The SC petition had sought to set aside the judgment of the division bench of the Calcutta High Court which had vacated the injunction passed by the single judge against the sale of the factory. A Philips India release issued late on Friday states: "The Supreme Court's decision finally brings to an end the interlocutory litigation begun by the employee-shareholders. Phlips India is now free to go ahead with the sale of the Salt Lake factory to Kitchen Appliances."

The Philips board had passed a resolution in December 1, 1998, for the sale and transfer of the consumer electronics factory as a on-going concern for a consideration of Rs 9 crore. Pursuant to the understanding, Videocon nominated KAL as its nominee to purchase the consumer electronics factory. The agreement for sale was entered into on Septemebr 30, 1998. The consumer electronics contributed about 47 per cent of the turnover of the company in 1997.

The proposed sale was to include all fixed assets consisting of leasehold land, buildings, plant and machinery, furniture and fixtures, besides the sale and transfer of current assets and liabilities along with transfer of services of 359 employees.

The consumer electronics factory complex at Salt lake covers over 17,342 square meters. The factory maufactures audio equipment supported by its own production of sophisticated plastic tape-deck, besides audio magnetic heads and DC micromotors.

The grievance of the shareholder employees who took the company to Calcutta High Court was that the proposed sale is at a gross undervalue. Their contention being that the company has bought moulds of Rs 8 crore for the maufacture of colour televisions and therefore a sale value of Rs 9 corre is "misleading and tricky".

As per the judgment of the apex court, "the consideration for the sale is a matter to be negotiated between the seller and the purchase and the purchaser was entitled to take into account the notional cost of employee liabilities. In this case all relevant particulars had been set out in the explanatory statement ot the shareholders," the Philips release adds.