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Item 3. Legal Proceedings

2020-07-13 compared with 2019-06-14 · 58 added, 15 removed, 37 unchanged (66% of the section changed)

2 unchanged sentences

Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

There are no such matters that are deemed material to the consolidated financial statements as of March 31, 2019.

As of March 31, 2019, the Company was a party to four (4) shareholder lawsuits, as follows:

We believe there are no such matters that have a material financial impact on the consolidated financial statements as of March 31, 2020, except as disclosed below.

During the quarter ended September 30, 2019, the Company reached a preliminary agreement to resolve all derivative suits then- and currently-pending against the Company and various directors and officers.

In January 2020, the Company and the named defendant directors and officers executed a formal settlement agreement with the plaintiffs in all pending derivative lawsuits on specific final terms of settlement.

Pursuant to the settlement agreement, which was filed with the Court as an exhibit to an Amended Consent Motion for Preliminary Approval of Derivative Settlement on April 30, 2020, the Company will adopt certain corporate governance modifications, and the derivative plaintiffs will receive $200,000.00 from the Company’s insurer to cover their attorneys’ fees and a nominal service award.

The Company has created a provision for $200,000 as of March 31, 2020.

Shareholders were given notice of the proposed settlement through the Company’s filing of an SEC Form 8-K report, the issuance of a press release, publication in Investor’s Business Daily, and posting in the “Investors” section of the Company’s website, all of which were deemed by the court to constitute sufficient notice to shareholders of the settlement.

Shareholders were given the opportunity to assert objections to the final settlement, and no objections were received by the parties to the derivative suit or filed with the court.

On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved.

On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits.

As of March 31, 2020, the Company was a party to three shareholder lawsuits, as described below.

Shareholder Class Action Litigation

India Globalization Capital, Inc., et al., 8:18-cv-03396 (U.S.

India Globalization Capital, Inc., et al., Civil Action No.

8:18-cv-03396 (U.S.

District Court for the District of Maryland).

1 unchanged sentence

IGC, Ram Mukunda, Richard Prins, and Sudhakar Shenoy were named as defendants.

On May 13, 2019, the plaintiff in the Tchatchou litigation filed an amended complaint against IGC, Mukunda, and Claudia Grimaldi, thereby removing Prins and Shenoy as defendants.

The plaintiff in Tchatchou alleges that IGC, Mukunda, and Grimaldi violated Section 10(b) of the Exchange Act, SEC Rule 10b-5, and Section 20(a) of the Exchange Act and made false and misleading statements to the public by issuing a September 25, 2018 press release entitled “IGC to Enter the Hemp/CBD-Infused Energy Drink Space,” in which IGC announced it had “executed a distribution and partnership agreement” for the sugar-free energy drink named Nitro G.

The plaintiff in Tchatchou seeks an unspecified amount of damages.

On May 13, 2019, the plaintiff in the Tchatchou litigation filed an amended complaint against IGC, Mukunda, and Claudia Grimaldi, (collectively, the “Class Action Defendants”), thereby removing Prins and Shenoy as defendants.

The plaintiff in Tchatchou alleges that the Class Action Defendants violated Section 10(b) of the Exchange Act, SEC Rule 10b-5, and Section 20(a) of the Exchange Act and made false and misleading statements to the public by issuing a September 25, 2018, press release entitled “IGC to Enter the Hemp/CBD-Infused Energy Drink Space” and related disclosures, in which IGC announced it had “executed a distribution and partnership agreement” for the sugar-free energy drink named Nitro G, as well as through related public statements.

The plaintiff in Tchatchou has not publicly disclosed the amount of damages they seek.

On February 28, 2019, all pending shareholder class actions were consolidated, and the Tchatchou litigation was designated as the lead case.

For the current state of affairs regarding the Tchatchou Class Action Litigation, please refer to Note 21 - Subsequent Events.

On October 11, 2019, the Class Action Defendants filed a motion to dismiss the consolidated shareholder class action litigation on a number of grounds, including that the Class Action Defendants did not make any false or misleading statements or any materially false or misleading statements to the public;

the Class Action Defendants did not act with any intent to deceive the public, nor did they recklessly do so;

and that the Class Action Defendants’ alleged conduct did not cause any loss allegedly suffered by the class action plaintiffs.

The motion to dismiss remains pending before the United States District Court for the District of Maryland, and the Company anticipates that a decision is likely to be issued during calendar 2020, although it can provide no assurances of the same.

Harris-Carr v.

India Globalization Capital, Inc., et al., 8:18-cv-03408 (U.S.

India Globalization Capital, Inc., et al., Civil Action No.

8:18-cv-03408 (U.S.

District Court for the District of Maryland).

4 unchanged sentences

Shareholder Derivative Action Litigation

Mukunda, et al., 1:18-cv-03698 (U.S.

Mukunda, et al., Civil Action No.

1:18-cv-03698 (U.S.

District Court for the District of Maryland).

13 unchanged sentences

The false and misleading elements of the 2018 Proxy Statement led to the reelection of Defendant Prins, which allowed him to continue breaching his fiduciary duties to IGC.” Because the claims made in Erny are asserted against the individual defendants, as opposed to the Company, the Company is merely a nominal defendant.

The Company will monitor the case and proceed as appropriate under the circumstances as and if the matter progresses.

The Company has retained counsel for that purpose.

On January 28, 2019, the court issued a consent order staying proceedings in the Erny litigation pending resolution of an anticipated motion to dismiss to be filed by IGC, Mukunda, and Grimaldi in the Tchatchou matter, described above.

On May 9, 2019, all pending shareholder derivative matters were consolidated, and the Erny litigation was designated as the lead case.

Mukunda, et al., 8:19-cv-00493 (U.S.

On January 28, 2019, the court issued a consent order staying proceedings in the Erny litigation pending resolution of a motion to dismiss (which was then yet to be filed) by the Class Action Defendants in the Tchatchou matter, described above.

On May 9, 2019, Erny and Hamdan, described below, were consolidated, and the Erny litigation was designated as the lead derivative case.

On July 31, 2019, the Company and the Individual Defendants reached a preliminary agreement with the plaintiffs in the derivative suits identified herein to resolve all derivative suits, including the Erny litigation and the Hamdan and Patel matters, described below.

In January 2020, the Company and the named defendant directors and officers reached agreement with the plaintiffs in all pending derivative lawsuits on specific final terms of settlement, and all parties executed a mutually acceptable settlement agreement.

Shareholders were given the opportunity to assert objections to the final settlement, and no objections were received by the parties to the derivative suit or filed with the court.

On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved.

On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits.

Mukunda, et al., Civil Action No.

8:19-cv-00493 (U.S.

District Court for the District of Maryland).

3 unchanged sentences

Because the claims made in Hamdan are asserted against the individual defendants, as opposed to the Company, the Company is merely a nominal defendant.

On May 9, 2019, all pending shareholder derivative matters, including the Hamdan litigation, were consolidated, with the Erny litigation, described above, designated as the lead case.

As a result of the consolidation, the Hamdan litigation became subject to the January 28, 2019 order entered in the Erny litigation staying proceedings pending resolution of an anticipated motion to dismiss to be filed by IGC, Mukunda, and Grimaldi in the Tchatchou matter, described above.

On May 9, 2019, Erny and Hamdan were consolidated, with the Erny litigation, described above, designated as the lead case.

As a result of the consolidation, the Hamdan litigation became subject to the January 28, 2019, order entered in the Erny litigation staying proceedings pending resolution of an anticipated motion to dismiss to be filed by the Class Action Defendants in the Tchatchou matter, described above.

The Hamdan litigation is subject to the same negotiated settlement described in Erny, above, and is resolved effective July 6, 2020.

Mukunda, et al., Civil Action No.

8:19-cv-01673 (U.S.

District Court for the District of Maryland).

On June 6, 2019, IGC shareholder Dimple Patel instituted a shareholder derivative complaint on behalf of IGC in the United States District Court for the District of Maryland.

Ram Mukunda, Claudia Grimaldi, Rohit Goel, Richard Prins, Shajy Mathilakathu, and Sudhakar Shenoy (collectively, with reference to the Patel litigation, “Individual Defendants”) were named as defendants, and IGC was named as a nominal defendant.

The Patel litigation represents a claim made by a shareholder on behalf of the Company (as opposed to against the Company).

The complaint in the Patel litigation alleges that the Company should have filed suit against the Individual Defendants for breach of fiduciary duty.

Specifically, the complaint alleges that the Individual Defendants “violated their duty of good faith by knowingly causing and/or recklessly allowing the Company to make false and misleading statements and/or fail[ed] to disclose that:

(i) [IGC] substantially discontinued the business that it conducted at the time it began trading on the NYSE;

(ii) the Company had become engaged in ventures or promotions which have not developed to a commercial stage;

(iii) cannabis-related products, including CBD-based beverages, are illegal in Malaysia;

(iv) neither IGC nor Treasure Network was a licensed manufacturer of cannabis-based products in Malaysia;

(v) CBD-infused Nitro G was not an approved and registered product under Malaysian law;

(vi) Treasure Network, founded in 2017, was not “experienced”;

(vii) Treasure Network was a distributor, not a manufacturer;

(viii) at all relevant times, the Individual Defendants had the ability to exercise substantial control over Treasure Network;

(ix) consequently, the Company was not an operating company for the purposes of continued trading and listing on the NYSE American;

and (x) as a result, India Globalization’s public statements were materially false and misleading at all relevant times.” Because the claims made in the Patel litigation are asserted against the individual Defendants, as opposed to the Company, the Company is merely a nominal defendant.

The Patel litigation has not been consolidated with Erny and Hamdan to date.

The Patel litigation is subject to the same negotiated settlement described in Erny, above, and is resolved effective July 6, 2020.

On July 8, 2020, the Court dismissed the Patel litigation with prejudice pursuant to the approved settlement.

MINE SAFETY DISCLOSURES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings